Business and financial news corporation Bloomberg has reported that FedEx could be a shoe-in as the next natural bidder on TNT Express – the second-largest courier package delivery company in Europe – after the Dutch-based firm rejected a bid from United Parcel Service (UPS).
Despite ongoing talks between the two package delivery companies, TNT was emphatic in their rejection of UPS’s $6.43 billion offer. While UPS hasn’t had to slink away with its tail between its legs just yet, main rival Fed Ex is the most obvious suitor to try and win TNT with an offer of their own.
For both major global courier package delivery services, securing TNT has significant advantages in securing their presence in Europe. Kevin Sterling, an analyst at BB&T Capital Markets said: “FedEx would benefit more from buying TNT because they’re not as big in Europe, but UPS has made it very clear they want to continue to grow in Europe, that they like the opportunity in Europe, and they’ve been expanding their Cologne hub.”
While each service could benefit hugely from taking over TNT and its attendant swathe of Europe parcel delivery territory, the other enviable commercial bonus for both of them is to keep TNT away from the grasp of the other. The speculation on which of these two titans of the parcel service industry will present the most enticing offer to sway TNT could soon be at an end.
Despite the furious surge of rumour and counter rumour, FedEx has been playing its cards very close to its chest. A standard ‘no comment’ style proclamation was issued on February 20 from FedEx spokesperson Jess Bunn: “As a matter of policy, we do not comment regarding corporate development matters.”
Even without an expressed indication of interest from FedEx, TNT’s stock value has benefitted from the anticipated bidding battle between FedEx and UPS. At close of play yesterday, TNT’s stock was valued at over 10 per cent more than the unsolicited UPS offer of 9 Euros a share.
David Ross, analyst at Stifel Nicolaus, speculated that UPS could pay 11 euros per share for TNT and still add to its prospective earnings. At an upper limit, he believes that a bid war could push that asking price to as high as 15 euros a share.
“It could be an offensive move for FedEx as much as it’s a defensive move to go in and try to thwart a UPS takeover,” Lee Klaskow, a Bloomberg Industries analyst in Skillman, New Jersey, said “It doesn’t seem like the 9-euro offer is something that will stand.”
FedEx hasn’t been shy to make major overseas acquisitions in order to push the boundaries of its global territories. FedEx continues to butt heads with UPS, striving to be the premier choice for sending a parcel to India, China, Thailand and a host of emerging Asian countries. In 2007 the company spent $400 million to take over a joint venture with China’s Tianjin Datian W. Group Co in order to expand its prospects in Asia.
With the prime market of Europe determined as the latest battleground, TNT can expect a better offer, perhaps two competing offers, to follow shortly.
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