FedEx TNT buyout – what will the mega-merger mean?
AirCargo 238 archives stories
Monday, 31 August 2015
Taking over a global transport and logistics company is a whole lot more than sending an email offering to pay mega-bucks and the target company calling back with a “yes, thanks, look forward to your e-transfer of 4.4 billion euros”.
The FedEx Corporation’s proposal to buy – through a wholly-owned subsidiary – “all of the issued and outstanding shares” in TNT Express NV is progressing slowly but seemingly with a generally positive outlook through regulatory approval channels which involve not only the EU but also Australia and New Zealand.
Both the Australian Competition & Consumer Commission (ACCC) and the NZ Commerce Commission (NZCC) have responded to FedEx’s acquisition/merger proposal by triggering the mechanism set up to give the market protection against reduction of competition and subsequent impact on pricing.
Others asked by FedEx to get the wheels of regulatory approval turning include Russia, South Korea, Brazil, China, Chile, Colombia, Israel, Japan, Turkey and Ukraine.
ACCC has formally sought submissions from interested parties - which includes competitors, sector organisations or anyone else. The deadline for e-filing is September 3.
Provisional date for a decision is October 29. This might be a final ruling (open to appeal if FedEx or any other major player is unhappy with it) or alternatively a provisional one which might show where ACCC is heading and any pitfalls it views as necessary to resolve. In its request for submissions – sent to those identified as interested parties with a welcome to pass it on to others if wished – ACCC asked for advice on various scenarios as well as the general provisos of a competitiveness investigation.
One asks submitters: “Do you consider that the merged entity would have an increased ability to increase prices or reduce service levels to customers in Australia or would it be prevented from doing so by competition from DHL, UPS and others?”
And, it requests, “please address the potential for (i) Australia Post (including Star Track Express); (ii) Toll; and (iii) freight forwarders generally (for example, of shipments over 50kg), to be effective competitors to the merged entity in relation to supply of express international small package delivery services to customers in Australia”.
It also asks submitters to “identify any relevant barriers to expansion by existing providers of express international small package delivery services in Australia, or entry by new providers. “Do you consider it likely that existing competitors would expand and/or new competitors would enter if the merged FedEx/TNT increased prices or reduced service levels?
“Would you expect the proposed acquisition to increase these barriers to entry/expansion?”
Submissions are confidential to the extent that they are neither published nor disclosed to a third party other than ACCC advisers or consultants. But they can be made public in certain circumstances when compelled by law; ACCC is then required to advise the submitter/s so they have an opportunity to be heard.
NZCC has asked even more detailed questions of submitters as it undertakes its investigation.
Its aim is to have a decision ready by September 25 but warns this might be extended depending on how the investigation progresses.
In Europe, things also are moving along. The EC has initiated a ‘phase II review’ which calls for more information – this is the next step in the process where the European Commission conducts an in-depth analysis under the EU Merger Regulation before coming to a decision.
David Binks, president of FedEx Express Europe, said the group was confident the combination would increase competition and create benefits for customers.
“We continue to make progress on all of the necessary regulatory steps around the world that would allow us to complete this transaction in the first half of 2016 and unite two great teams that share a passion for customer service.”
TNT Express shareholders are to consider the FedEx offer on October 5. They have until October 30 for a decision.
There is solid support for the deal from TNT directors, major shareholders, staff councils and unions.
B763 freighters to come FedEx is the throes of a substantial fleet renewal program.
In June the group announced it had permanently retired 15 aircraft and 21 related engines. These include seven MD11, three A300, four A310 and one MD10-10 freighters.
An industry advisory from FedEx pointed out that “the B767 provides similar capacity as the MD10 with improved reliability, an approximate 30 per cent increase in fuel efficiency and a minimum of a 20 per cent reduction in unit operating costs”.
The company confirmed this B767 enthusiasm in late July (as reported in our daily e-news) when it announced an order for a further 50 B763 freighters, taking its total firm orders of the type to 106. It also holds options for a further 50 B763F.
FedEx president and ceo David Bronczek said “acquiring additional 767F aircraft is a continuation of our very successful air fleet modernisation program and will enable us to reduce structural costs, improve our fuel efficiency and enhance the reliability of our global network”.
For Boeing, the late-July order and options have breathed new life into the B767 production line.
FedEx TNT buyout – what will the mega-merger mean?
AirCargo 238 archives stories
Monday, 31 August 2015
Taking over a global transport and logistics company is a whole lot more than sending an email offering to pay mega-bucks and the target company calling back with a “yes, thanks, look forward to your e-transfer of 4.4 billion euros”.
The FedEx Corporation’s proposal to buy – through a wholly-owned subsidiary – “all of the issued and outstanding shares” in TNT Express NV is progressing slowly but seemingly with a generally positive outlook through regulatory approval channels which involve not only the EU but also Australia and New Zealand.
Both the Australian Competition & Consumer Commission (ACCC) and the NZ Commerce Commission (NZCC) have responded to FedEx’s acquisition/merger proposal by triggering the mechanism set up to give the market protection against reduction of competition and subsequent impact on pricing.
Others asked by FedEx to get the wheels of regulatory approval turning include Russia, South Korea, Brazil, China, Chile, Colombia, Israel, Japan, Turkey and Ukraine.
ACCC has formally sought submissions from interested parties - which includes competitors, sector organisations or anyone else. The deadline for e-filing is September 3.
Provisional date for a decision is October 29. This might be a final ruling (open to appeal if FedEx or any other major player is unhappy with it) or alternatively a provisional one which might show where ACCC is heading and any pitfalls it views as necessary to resolve. In its request for submissions – sent to those identified as interested parties with a welcome to pass it on to others if wished – ACCC asked for advice on various scenarios as well as the general provisos of a competitiveness investigation.
One asks submitters: “Do you consider that the merged entity would have an increased ability to increase prices or reduce service levels to customers in Australia or would it be prevented from doing so by competition from DHL, UPS and others?”
And, it requests, “please address the potential for (i) Australia Post (including Star Track Express); (ii) Toll; and (iii) freight forwarders generally (for example, of shipments over 50kg), to be effective competitors to the merged entity in relation to supply of express international small package delivery services to customers in Australia”.
It also asks submitters to “identify any relevant barriers to expansion by existing providers of express international small package delivery services in Australia, or entry by new providers. “Do you consider it likely that existing competitors would expand and/or new competitors would enter if the merged FedEx/TNT increased prices or reduced service levels?
“Would you expect the proposed acquisition to increase these barriers to entry/expansion?”
Submissions are confidential to the extent that they are neither published nor disclosed to a third party other than ACCC advisers or consultants. But they can be made public in certain circumstances when compelled by law; ACCC is then required to advise the submitter/s so they have an opportunity to be heard.
NZCC has asked even more detailed questions of submitters as it undertakes its investigation.
Its aim is to have a decision ready by September 25 but warns this might be extended depending on how the investigation progresses.
In Europe, things also are moving along. The EC has initiated a ‘phase II review’ which calls for more information – this is the next step in the process where the European Commission conducts an in-depth analysis under the EU Merger Regulation before coming to a decision.
David Binks, president of FedEx Express Europe, said the group was confident the combination would increase competition and create benefits for customers.
“We continue to make progress on all of the necessary regulatory steps around the world that would allow us to complete this transaction in the first half of 2016 and unite two great teams that share a passion for customer service.”
TNT Express shareholders are to consider the FedEx offer on October 5. They have until October 30 for a decision.
There is solid support for the deal from TNT directors, major shareholders, staff councils and unions.
B763 freighters to come FedEx is the throes of a substantial fleet renewal program.
In June the group announced it had permanently retired 15 aircraft and 21 related engines. These include seven MD11, three A300, four A310 and one MD10-10 freighters.
An industry advisory from FedEx pointed out that “the B767 provides similar capacity as the MD10 with improved reliability, an approximate 30 per cent increase in fuel efficiency and a minimum of a 20 per cent reduction in unit operating costs”.
The company confirmed this B767 enthusiasm in late July (as reported in our daily e-news) when it announced an order for a further 50 B763 freighters, taking its total firm orders of the type to 106. It also holds options for a further 50 B763F.
FedEx president and ceo David Bronczek said “acquiring additional 767F aircraft is a continuation of our very successful air fleet modernisation program and will enable us to reduce structural costs, improve our fuel efficiency and enhance the reliability of our global network”.
For Boeing, the late-July order and options have breathed new life into the B767 production line.
um of a 20 per cent reduction in unit operating costs”.
