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May 30, 2016 3:00 AM, EDT

FedEx Begins Integrating TNT After Purchase

TNT Express

This story appears in the May 30 print edition of Transport Topics.

FedEx Corp. announced last week that it would begin integration of TNT Express assets immediately after completing the $4.9 billion deal, its largest-ever acquisition.

“In the near term, customers can expect to interact with each company as they always have and receive the world-class service they have come to expect,” the Memphis, Tennessee-based company said in a statement May 25. “Once the integration is complete, FedEx expects customers to enjoy an expanded global offering that draws upon the breadth of expertise from both companies.”

FedEx, which completed the deal less than a month after receiving final governmental regulatory approval, didn’t provide details about its financial expectations or specific steps that would follow the acquisition — completed 14 months after its initial offer for Hoofddorp, Netherlands-based TNT.

The statement did say the move will add “significant value for FedEx share owners, team members and customers.”

When the acquisition was announced, Credit Suisse analyst Allison Landry estimated additional annual earnings of $1.40 per share by 2019. That’s 13% above the current earnings projection by FedEx, which is No. 2 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

“This acquisition is a significant accomplishment and marks the beginning of a new era, filled with promise for our people, customers and share owners,” said Fred Smith, chairman and CEO of FedEx. “We are proud to celebrate the joining of two iconic companies and the approximately 400,000 team members who are committed to serving customers around the world.

“The timing of this historic event is important, particularly in the current market environment, where global e-commerce is growing at double-digit rates.”

FedEx’s announcement said the company plans to leverage technology, infrastructure, facilities and operational capabilities as a stronger package delivery company emerges in Europe, which is a $60 billion package market with potential e-commerce growth at a 15% pace.

“This is a historic day for both of our companies and for the industry as a whole,” FedEx Europe President David Binks said. “[The acquisition] will propel our position as a major competitor in this part of the world.”

The combined operation will offer a broader range of services for e-commerce and other customers, he said, such as new, more economical ground service in Europe based on TNT’s network as a complement to the existing FedEx package network.

Binks and FedEx Express President David Bronczek, said during a news conference May 25 that the company plans to maintain the major TNT air hub at Liege, Belgium, as well as FedEx’s facilities in Paris and Cologne, Germany.

Binks said completion of the acquisition enables the companies to move from a road map for integration to an actual, executable plan that could not be started before now because sensitive commercial information could not be shared.

Neither speaker would give a timeframe for the integration process. Binks said, however, the intent is to avoid significant job loss from the current combined 400,000 workers.

Instead, he said the acquisition is based on optimism that the business will grow.

FedEx plans to disclose integration costs, particularly for technology, in its quarterly earnings reports. The fiscal fourth-quarter report is slated for release June 21.

TNT agreed to sell its airline, with about 60 planes, to Irish firm ASL Group, Bronczek said, as a condition of the acquisition. FedEx has 657 aircraft, including a few retained from TNT.