They say you should never go back… but those of you with long memories might recall that we’ve almost been here before when it comes to FedEx and TNT Express.
Back in July 2008, the Financial Times reported that the US firm has been in preliminary talks about a possible purchase. A report that was swiftly denied by both parties with the traditional caveat that they would not comment on speculation and market rumours.
However, such denials – the business reporting equivalent of a government department saying it can ‘neither confirm nor deny’ – did not stop speculation.
Erik Van Baaren, senior analyst at Datamonitor Logistics and Express at the time, said of such speculation (on our predecessor site roadtransport.com) that significant pressure would be placed upon rivals DHL and UPS, given that “they would have to compete with a global player capable of exploiting greater economies of scale and serving the needs of globally operating companies more efficiently as further internationalisation of the industry takes shape".
The Wall Street Journal speculated in 2008 that buying TNT, with its strong position in the European market, would turbocharge FedEx’s international expansion. It also noted that TNT’s market cap at the time was €9bn. Seven years later, the offer price is €4.4bn.
However, that comparison comes with some caveats. Firstly, FedEx is well aware of the whole anti-trust situation that scuppered the UPS bid for TNT Express.
One sticking point for the European Commission was TNT's airfreight business (and fleet of planes). FedEx has stated its intention to divest TNT's airline operations - in compliance with "applicable airline ownership regulations".
Secondly, it's not even a like-for-like comparison. TNT Express demerged from TNT NL in 2011 (with TNT NL becoming Post NL - parent company to the former TNT Post, now Whistl). Making such comparisons, given the complicated history of TNT, is a science best avoided.
If the deal does go through, TNT Express will be the junior partner in FedEx. Its €6.7bn turnover in 2014 is dwarfed by FedEx's $47bn (€43bn) in what would be a near €50bn entity.