EU approves FedEx takeover of TNT Express

European Union regulators have unconditionally approved FedEx Corp.’s acquisition of Dutch parcel company TNT Express NV, ending a six-month antitrust investigation that had been one of the biggest hurdles toward the near-US$5 billion deal.

The merger, announced in April, would allow FedEx to acquire an extensive ground network in Europe, making it a bigger player in the burgeoning e-commerce market.

The approval had been expected since FedEx said in October that European regulators wouldn’t challenge the transaction. That was seen as an unexpectedly easy pass from Europe’s antitrust cops, who had blocked a similar deal between rival United Parcel Services Inc. and TNT in 2013.

The European Commission, the bloc’s top antitrust authority, opened a full investigation into the deal in July, warning that the merged company may face insufficient competition on certain parcel delivery routes, which could lead to higher prices for businesses and consumers.

But on Friday, the regulator said it had concluded that the delivery companies weren’t particularly close competitors in Europe, and that the merged entity would “continue to face sufficient competition from its rivals.”

“We are extremely pleased to receive the European Commission’s unconditional approval,” said David Binks, FedEx’s regional president for Europe.

Binks said the deal, which will create the third-largest company in Europe’s international express-delivery market behind DHL and UPS, would “provide significant value to the employees, customers and shareholders of both companies.”

EU antitrust chief Margrethe Vestager said her agency had “thoroughly assessed the markets affected” by the deal due to the importance of affordable package delivery for many businesses and consumers, particularly in the burgeoning e-commerce market.

“The conclusion is that European consumers will not be adversely affected by the transaction,” Vestager said.

Executives at both companies had maintained the deal was substantially different from Atlanta-based UPS’s attempt because FedEx’s operations in Europe are much smaller than UPS’s were.

UPS had revised its EUR5.2 billion ($5.63 billion) proposal, then valued at nearly $7 billion, three times and made plans to create a pan-European competitor in the overnight-parcel-delivery market, but failed to satisfy the EU’s concerns.

FedEx said it is working “constructively” with regulators that haven’t approved the transaction, notably in Brazil and China. The company said it expects the deal to close by June.

Source: MarketWatch

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