DHL said it expected to benefit from the planned acquisition of TNT by FedEx by taking on
disaffected customers and staff that may choose to leave one or other of the businesses because of
disruptions or uncertainties related to the merger or its integration process.
Responding to questions from CEP Research about whether the combination of TNT Express and FedEx
would present a significant threat to the business of DHL Express, a spokesman said: “It is only
natural that we are carefully monitoring the developments in our market. With regards to a
combination of FedEx and TNT Express, we actually see additional business opportunities. Experience
shows that large-scale integrations likely will bring disruptions for our competitors’ customers,
suppliers and staff, from which DHL can benefit.”
On the questions of whether DHL had any concerns about the transaction in terms of its
competition implications, and whether it expected the transaction to get clearance from the
European Commission, he said: “We expect that the merger will be examined by a number of antitrust
authorities including the European Commission, as the combination will undoubtedly result in
significant competitive changes in the express and logistics industry in Europe as well as in
various other regions worldwide.”
Frank Appel, chief executive of Deutsche Post DHL, made similar comments about potential
opportunities back in 2012 after UPS and TNT announced plans to merge. At the time, Appel said DHL
expected UPS to lose some focus during the complex process of integrating TNT Express.
“If a company is integrating another company, that distracts from the service and the
customers,” he said. “We see an opportunity to capture market share – therefore, we’re relaxed
overall.” Appel, nevertheless, had urged the European Commission to examine the takeover’s
implications carefully.
After UPS in early 2013 abandoned its plans to buy TNT, because of competition objections
from the European Commission, senior UPS executives admitted that some aspects of their European
and international business had suffered because of the amount of time and energy that some
executives had spent on preparing for the planned merger.
UPS declined to comment on the planned acquisition of TNT by FedEx and whether it was a threat
to its business, saying: “We do not comment on competitor M&A activities.”
Responding to questions from analysts week following the announcement of FedEx’s agreement to
buy TNT Express, FedEx Corp chairman and CEO Fred Smith said: “FedEx has a very strong track record
of incorporating transactions into FedEx. We expect similar success with TNT, as the cultures are
very similar.”
CFO Alan Graf said the combination of FedEx and TNT “is not expected to raise anti-trust
concerns, principally because of the relative strengths of competitors in the relevant markets in
the EU and other relevant jurisdictions. We expect the transaction to be completed in the first
half of calendar 2016.”
Asked by analysts about the biggest hurdles or risks from the planned merger or integration,
Graf said: “Our track record of integrating companies is excellent. If you take a look at the
Flying Tigers; Caliber – which is now FedEx Ground; American Freeway; we know how to do this. That
is one of the great strategic strengths of this company. We have a great integration planning
process.”
He continued: “But obviously the biggest risks are two: One, it is going to take a while to get
these approvals; and two, the execution risk. While the execution risk here is probably high
relative to the other deals that we have done, I don’t think that there is any question that we are
up to the task.
“We know what we need to do, we will be investing a lot of our greatest talent in figuring out
how to integrate this – not only in terms of operations, but also IT, accounting, tax, across the
board. We know what the task at hand is and I believe we are up to it. This will be one of the
biggest wins we have ever done.”
Graf added: “TNT will be highly complementary to our global operations. The company generates
nearly all of its €6.7 billion annual revenue outside of the US, from its major position in Europe
and solid presence in Asia-Pacific, the Middle East, and other emerging markets.
“The company delivers more than 1 million shipments around the world every day, utilising a
network of over 1,000 hubs and depots. We believe this acquisition is a smart, cost-effective way
to significantly expand our global capabilities and improve our densities.”
He said the combination offered “a unique combination to strengthen the resource base of both
companies”, adding: “FedEx will develop a very comprehensive integration plan with TNT, but we will
talk more about our plan and related costs at a later date. We believe this is a fantastic
transaction, which will allow us to drive incremental revenue, earnings, and cash flow for our
company and long-term value to our shareholders.”
