Brussels launches probe into FedEx’s proposed TNT takeover

The European Commission has opened an in-depth investigation into FedEx’s proposed $4.8bn takeover of TNT Express over concerns the deal could reduce competition and push up prices.
The Commission said it had concerns that on a number of European markets for international express and regular small package deliveries, the merged entity would face insufficient competitive constraints from the only two remaining players, UPS and DHL.
This could lead to higher prices for business customers and consumers, it said.
Both TNT and FedEx described the probe as a phase 2 review and said it was a customeray part of the Commission’s investigation process.
Commissioner Margrethe Vestager, in charge of competition policy said: "Many businesses, and in particular e-commerce, rely heavily on affordable and reliable small package delivery services, and many consumers depend on these services to ensure rapid and safe delivery of goods they have bought.
“The Commission must therefore make sure that FedEx's takeover of TNT would not impede effective competition and would not lead to higher prices for consumers.”
A preliminary investigation conducted by the Commission indicated that DHL and UPS would be the only significant competitive constraint on the merged entity for most international express services, with a destination within or outside the European Economic Area (EEA).
As the proposed transaction would reduce the number of integrators competing in the EEA from four to three, the competitive constraint on the merged entity would be significantly reduced, leading to a concentrated market in several member states for international express delivery services to a destination within or outside the EEA.
The Commission's initial investigation also showed that the merged entity would have very high market shares for services to some destinations leading to potential competition concerns.
The Commission now has 90 working days, until 8 December 2015, to investigate the proposed acquisition and to determine whether initial concerns are founded.
FedEx said the transaction is also being reviewed by other antitrust agencies, including the Ministry of Commerce (MOFCOM) in China and Conselho Administrativo de Defesa Econômica (CADE) in Brazil.
FedEx Express Europe president David Binks said: “We will continue to work together with TNT Express to meet the European Commission’s need for additional due diligence and are confident that the combination of both companies will 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 said it looked forward to the success of the intended acquisition.
“The company will continue to cooperate with FedEx and the European Commission with a view to a positive outcome,” it added. “During the transaction approval process, TNT remains focused on executing its Outlook transformation and turnaround strategy.”
FedEx had sought to assuage competition concerns by promising to sell the TNT air fleet of 54 freighter aircraft would be sold to a third party.
On announcing its half-year results, TNT said it expected the deal to be completed in the first half of next year.
The takeover of TNT is based on an all-cash offer by FedEx for all issued and outstanding ordinary shares, including shares represented by American Depositary Receipts of TNT Express for a cash offer price of €8.00 per share.
FedEx started the formal process to obtain merger control approval from the Commission by submitting the required filing to obtain regulatory clearance on June 26.

Source : http://www.aircargonews.net/news/airlines/express/single-view/news/brussels-launches-probe-into-fedexs-proposed-tnt-takeover.html

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FedEx updates on freighter retirements and TNT acquisition

FedEx has provided more details on its decision to retire freighters early, while also providing an update on its proposed takeover of TNT Express and saying that it will continue on the acquisition trail.
Speaking shortly after the announcement of its fiscal year fourth quarter results, the US express giant said its decision to retire 15 aircraft and 21 related engines and also adjust the retirement schedule of an additional 23 airframes and 57 engines was part of a profit improvement plan.
FedEx chairman, president and chief executive officer Frederick Smith said: “We’re getting rid of very inefficient fuel burning aircraft of high maintenance to a newer fleet, better maintenance, better reliability, better fuel efficiency.
“So we’re balancing our fleet in the US and around the world and that’s part of our profit improvement plan.
“We need to buy [to modernise the fleet] 12, 15 airplanes a year and we continue to do that and you can count on us continuing to that because they are aluminum, they oxidize, they wear out and the new models fortunately burn a lot less fuel and are much more reliable.
“One of the reasons that the fleet can go down is that we don’t need as many spares with the new technology airplanes as we did with the old ones.
FedEx Express president and chief executive David Bronczek said the planes that were to be retired were “basically parked in the desert”.
“They were in engine repair that was going to be too expensive to bring back,” Bronczek said.
The company also said it hoped to complete the acquisition of TNT earlier than expected, although no new time line was provided.
In May, it predicted it would take a year for the purchase to gain regulatory clearance.
Executive vice president, general counsel and secretary Christine Richards said: “We’re doing a tremendous job. We are preparing to submit our initial offering documents as required by Dutch law by the end of this month.
“And we are well underway with the preparation of the necessary filings with competition authorities.
“We have been in consultation with European Competition Commission and continue to believe FedEx and TNT operations are highly complementary in Europe and we do not believe that the transaction faces any competition issues for the commission.
“So we’re in good shape. We’re going to try to get this done as quickly as we can.”
FedEx said it would also continue to be “aggressive in the acquisition space” over the coming years.
“As to any specifics about any specific space,” said executive vice president and chief financial officer Alan Graf. “I will just say that depends on the fit, the culture, the price and all three of those things are vital.”

Source : http://www.aircargonews.net/news/airlines/single-view/news/fedex-updates-on-freighter-retirements-and-tnt-acquisition.html

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