FedEx’s historic €4.4 billion takeover of rival TNT looks to have cleared its biggest hurdle after the European Commission told the two companies that it would not issue any major objections to the deal.
Brussels launched an in-depth investigation into the deal in July over concerns about the potential impact on competition and set a deadline of December 8, 2015 (later extended to January 13, 2016), to announce a decision. At the time it warned that a combined FedEx-TNT, which would compete with DHL and UPS in future, could led to reduced competition and higher prices in some European markets.
In early October, the Wall Street Journal reported that Brussels was considering whether to force FedEx and TNT to make concessions such as asset sales as part of approval for the deal, and could issue a ‘statement of objections’ within the next two weeks. However, Reuters reported yesterday that the Commission was set to give the deal an all-clear.
FedEx and TNT issued a joint statement late yesterday confirming in response to recent media coverage that they had not received a Statement of Objections from the European Commission. “The internal deadline of the European Commission for issuing a Statement of Objections would have expired on 23 October 2015, but FedEx and TNT have been informed by the European Commission that no Statement of Objections will be issued,” they added.
European Commission spokesman Ricardo Cardoso told CEP-Research today: “This merger investigation is ongoing and the current deadline for our decision is 13 January. The companies have not offered commitments until now.”
Taken together, the statements from FedEx/TNT and the European Commission indicate that Brussels is likely to approve the deal without any major conditions since these would normally need to be included within the ‘statement of objections’. There had been speculation that some disposals in some European markets might have been necessary. The only clearly necessary asset sale is of TNT Airways, since a US company cannot own a European airline under EU aviation regulations.
The two companies reiterated that they continue to expect that the offer will close in the first half of calendar year 2016. Regulatory approval is also necessary in some other countries but this is not seen as a problem.
On October 5, TNT shareholders approved FedEx’s €4.4 billion takeover offer and currently have until October 30, 2015, to sell their shares to FedEx, unless the offer made on August 21 is extended pending regulatory clearance from all authorities. The €8 per share offer is dependent on at least 80% of shares being sold to FedEx.
