FedEx-TNT Merger Clears Final Hurdle With Chinese Approval

A final barrier to FedEx’s proposed $4.8 billion acquisition of Dutch carrier TNT Express NV has been cleared via an unconditional approval from the Chinese Ministry of Commerce. The deal has already been blessed by authorities in the EU and Brazil, after an initial challenge last fall by the former. U.S. regulators approved it last year.

Brazilian approval of the FedEx-TNT merger came despite a challenge in February from rival UPS, which asked for a more thorough review.

UPS had tried to acquire TNT but dropped the bid in 2013 in the face of serious antitrust flak from EU authorities. What changed in terms of the EU regulatory landscape over the past three years, or why one deal passed muster while the other was significantly challenged, remains unclear.

“I want to thank the team members who collaborated with regulatory authorities around the world to help us reach this important acquisition milestone,” said David Bronczek, President and CEO, FedEx Express, in a release. “As we work towards closing the acquisition, we look forward to welcoming TNT Express team members to the FedEx family of companies as we expand our portfolio of solutions and connect even more people and possibilities.”

“With this final regulatory approval, we are one step closer to making the vision of combining the complementary networks of FedEx and TNT Express a reality,” said TNT Express CEO Tex Gunning in the release. “This intended acquisition will bring value for our customers, shareholders and employees.”

With some variance among analysts and observers, the TNT acquisition will enable FedEx to reach near parity with UPS in Europe, or possibly pass it into second place behind leader DHL. Other major EU players include Dynamic Parcel Delivery (DPD), a subsidiary of France’s La Poste’s GeoPost, and General Logistics Systems, a parcel delivery group owned by Royal Mail.

Until now, FedEx had mostly focused on international delivery in Europe, not among its member countries. That will change with the addition of TNT.

UPS CEO David Abney told analysts on a recent earnings call that his company wasn’t concerned about the impact of the pending merger, citing the company’s $2 billion, five-year investment in its European network.

“We have a very strong position in Europe,” Abney said. “We’ve been winning in Europe for some time now, and we’ve certainly been sprinting over the last several years. We haven’t changed our strategy. We’re going to continue to invest and grow in Europe, and we are certainly seeing benefits of that in 2015.”

James Jay Barber, president of UPS International, said the company has only done work at 19 of 70 facilities it plans to expand between now and 2018.

“We’re going to be doing that much in line with the customer’s expectation in Europe post-merger,” Barber said. “We’ve had our eyes on that for some time. And so we are kind of looking at our customer solution specifically and our network, making sure that it leans into those risks and opportunities that any merger brings forth.”

“The acquisition makes strategic sense for FedEx to immediately grow its European capabilities, distribution footprint and market share,” said Rob Martinez, president and CEO of Shipware. “While FedEx already operates a sizable air fleet in Europe, TNT now gives it an expansive ground network throughout the continent, especially within France and the U.K.”

Mike O’Brien is Senior Editor of Multichannel Merchant

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