EU Approves FedEx Acquisition of TNT Express

Excerpt from: WSJ | By: Tom Fairless and Laura Stevens | January 8, 2016

European Union regulators have unconditionally approved FedEx Corp.’s acquisition of Dutch parcel company TNT Express NV, ending a six-month antitrust investigation that had been one of the biggest hurdles for the nearly $5 billion deal.

The merger, announced in April, would allow FedEx to acquire an extensive ground network in Europe, making it a bigger player in the burgeoning e-commerce market.

Photo Source:

The approval had been expected since FedEx said in October that European regulators wouldn’t challenge the transaction. That was seen as an unexpectedly easy pass from Europe’s antitrust police, who had blocked a similar deal between rival United Parcel Services Inc. and TNT in 2013.

FedEx is still awaiting approvals from several countries, most notably China and Brazil, while U.S. regulators approved the deal last year.

China recently has emerged as something of a wild card for deal-makers world-wide, as the country’s newly-established antitrust authority considers issues beyond traditional competition law, including whether deals may harm Chinese national economic development, experts say. It also has a smaller staff than many of its peers.

As a result, China has held up for months some recent global mergers after they were approved by U.S. and EU antitrust authorities, including Microsoft’s Corp.’s €5.4 billion ($5.85 billion) acquisition of Nokia Corp.’s handset business.

Analysts largely expect FedEx to receive clearance from the remaining countries, and FedEx said it is confident it will close the deal in the first half of the year.

On an analyst call last month, FedEx Chief Executive Fred Smith said TNT would be a welcome addition to the company’s portfolio amid a global economic slowdown. “Despite contraction of U.S. exports due to the high U.S. dollar and low world [economic] and trade growth, the overall market for international door-to-door express continues to increase, also driven by e-commerce,” he added.

Until now, FedEx has largely focused on international delivery services in Europe, with limited shipping options between countries. Combining the two networks will make it the third largest player in Europe’s international express-delivery market, behind Deutsche Post AG’s DHL and UPS. It will allow the company to become a player in ground delivery to better compete with the others for a bigger share of e-commerce shipments.

The European Commission opened a full investigation into the deal in July, warning that the merged company might face insufficient competition on certain parcel delivery routes, which could lead to higher prices for businesses and consumers.

But on Friday, the regulator said it had concluded the delivery companies weren’t particularly close competitors in Europe and that the merged entity would “continue to face sufficient competition from its rivals.”

“We are extremely pleased to receive the European Commission’s unconditional approval,” said David Binks, FedEx’s regional president for Europe. Mr. Binks said the deal would “provide significant value to the employees, customers and shareholders of both companies.”

EU antitrust chief Margrethe Vestager said her agency had “thoroughly assessed the markets affected” by the deal due to the importance of affordable package delivery for many businesses and consumers, particularly in the burgeoning e-commerce market. “The conclusion is that European consumers will not be adversely affected by the transaction,” Ms. Vestager said.

Executives at both companies had maintained the deal was substantially different from Atlanta-based UPS’s attempt because FedEx’s operations in Europe are much smaller than UPS’s were.

UPS had revised its €5.2 billion ($5.63 billion) proposal, then valued at nearly $7 billion, three times and made plans to create a pan-European competitor in the overnight-parcel-delivery market, but it still failed to satisfy the EU’s concerns.

Write to Tom Fairless at and Laura Stevens at