TNT chiefs today wrote off “worldwide protests” by UPS to its planned acquisition by FedEx and reiterated that the €4.4 billion deal is still expected to complete by the scheduled date of 6 June despite regulatory approval still pending from China and other countries.
UPS recently lost its appeal against Brazilian regulatory approval for the FedEx-TNT merger, is reportedly considering an appeal should the Chinese regulator okay the deal, and, according to a Reuters report, today went to the European Court of Justice to appeal against the European Commission’s 2013 decision to block its own bid for TNT.
But TNT supervisory board chairman Antony Burgmans told shareholders at today’s AGM: “UPS is protesting all around the globe, including in Brazil but there the authorities have dismissed their objections and I think that’s going to be the same everywhere including China.”
He said he was confident that Chinese regulatory approval would be gained by June and reiterated that TNT and FedEx still expect the deal to be completed in the first half of this year. The deal has already been approved by the European Commission and regulatory authorities in the USA, Australia and various smaller markets.
However, TNT legal secretary Tjeerd Wasselaar noted that the deal’s ‘long-stop’ date of June 6 could be extended if necessary at the agreement of both parties.
Burgmans also stressed that FedEx’s offer of €8 per share was “a reasonable amount” and a good deal for TNT shareholders who would be well rewarded for their investment. “I’m sure that we will get 100% of people offering their shares,” he commented.
Looking back at TNT’s 70 year-history, TNT CEO Tex Gunning admitted it had been “a bumpy ride at times” in recent years when the company “lost its way”, including due to under-investment, “ill-informed” acquisitions in countries such as China, Brazil and India, while a loose geographical structure “with no clear accountability or line of sight” meant that “in fact, the company was not in control”.
But the current 3-5 year Outlook “turnaround and transformation” strategy had started to produce results in 2015, which was “a year of transition”, he told shareholders. “Turning and transforming a company takes time. There are no quick fixes,” he emphasised.
Highlights last year, according to Gunning, included better profits, 3.4% underlying revenue growth, 5.1% growth in SME revenues and a 10% volume increase in the European Road Network, which he described as “the jewel in the crown”. TNT also invested €309 million in various infrastructure and network improvements and introduced the “perfect depot” programme at more than 300 locations.
On the issue of the planned sale of TNT Airways to Ireland-based ASL Airlines, which is legally necessary because a US company cannot own a European airline, CFO Maarten de Vries declined to disclose the agreed sale price to shareholders. But he clarified that ASL would buy TNT’s 35 owned planes as part of the deal and take over the leased aircraft under the multi-year service contract.
TNT also decided not to pay a dividend for 2015 in view of FedEx’s offer for the company. If TNT were to pay a dividend, the dividend amount would be subtracted from the offer price upon FedEx’s actually purchasing the shares from TNT’s shareholders, it explained.
