What seemed like a sure deal may not be a slam-dunk after all. According to the Wall Street Journal, regulators in the European Union (EU) have said they may consider demanding concessions, including the selling off of some assets, with regard to the proposed takeover of TNT Express by FedEx Corp.
EU regulators could submit a formal complaint to FedEx within a couple of weeks, which could trigger new negotiations. Netherlands-based TNT, the subject of the takeover, issued a profit warning Oct. 5, but still secured shareholder approval for the US$4.9 billion takeover by FedEx.
TNT also reported that third-quarter adjusted operating profit was down compared to a year ago, due to economic woes in Brazil, China and Australia. TNT’s share price dropped 1.2 percent to $7.58, which is below FedEx’s offer of $9 per share.
An attempt by FedEx rival UPS to purchase TNT in 2013 was shut down by the European Commission over concerns about reduced competition, due to the combined market share of the proposed UPS/TNT entity. The Wall Street Journal quoted sources close to FedEx, saying that the deal is “very finely balanced,” and that the EU regulators have yet to decide whether to send a statement of objections.
Antony Burgmans, chairman of TNT’s supervisory board, said TNT has a “plan B” if the deal fails, which is a new strategy, but added that it wouldn’t lead to significant progress in TNT’s bottom line until 2018.
Get more air cargo insights at the 2015 Cargo Facts Symposium, Oct. 26-28 in Miami. Click here for details.