FedEx Bulks Up in Europe, Cites E-commerce Growth
In the U.S., the main package delivery organizations marketers cite are the U.S. Postal Service, UPS and FedEx. In addition, those entities often work with each other. Not so much in Europe, where FedEx just agreed to buy a rival for $4.8 billion, according to the company's announcement on Tuesday. However, similar to its reasons for growth in the U.S., FedEx names e-commerce as the reason it's doubling its market share in Europe by purchasing TNT Express.
"We believe that this strategic acquisition will add significant value for FedEx shareowners, team members and customers around the globe," says Frederick W. Smith, chairman and CEO of Memphis-based FedEx Corp. "This transaction allows us to quickly broaden our portfolio of international transportation solutions to take advantage of market trends—especially the continuing growth of global e-commerce—and positions FedEx for greater long-term profitable growth."
Using numbers from 2013, the International Business Times says prior to the acquisition, FedEx and TNT had 12 percent each of the market among European delivery providers. In the publisher's chart, DHL ranks No. 1 at 41 percent and UPS comes in a distant second at 25 percent. This purchase still leaves FedEx at No. 3, with 24 percent, using the publisher's numbers.
IBT says UPS had tried to buy TNT for $7 billion two years ago, but European antitrust regulators put a stop to that deal. At 3 p.m. Eastern, FedEx shares were up 3 percent to nearly $172 and TNT's rose 28 percent.
"The combined companies' customers would enjoy access to a considerably enhanced, integrated global network," the FedEx statement says of the consequences of this deal for customers. "This network would benefit from the combined strength of TNT Express [sic] strong European road platform and Liege hub and FedEx's strength in other regions globally, including North America and Asia. TNT Express customers would also benefit from access to the FedEx portfolio of solutions, including global air express, freight forwarding, contract logistics and surface transportation capabilities."