FedEx Corp., the second-largest US express company, is in preliminary talks to buy TNT, Europe’s second-biggest express-delivery service, according to are port in the Financial Times last month. Rising fuel costs and an economic decline revived merger discussion between FedEx and TNT, the UK newspaper said,without citing sources.
The move is seen a logical one as both companies have virtually no presence inits competitor’s main market. A takeover of TNT would give FedEx a full European air and road-delivery network, including an air hub in Liege, Belgium, and a trucking centre in Arnhem, Netherlands.
TNT, which posted 2007 revenue of €11 billion, is also the Netherlands’ largest letter-delivery service and also has mail operations in Germany and the UK. Last year, FedEx had sales of just under $38 billion and in June FedEx posted its first quarterly loss in 11 years as spending on fuel continues to climb and a slowing US economy curbs demand.
FedEx said recently that it plans to expand a freight hub at Paris Charles deGaulle airport to meet growing demand for express deliveries in Europe. Paris is FedEx’s biggest air-freight hub outside the US and serves as the company’s main sorting facility for Europe.
The FedEx speculation comes after Bonn-based Deutsche Post, Europe’s biggest mail carrier and the region’s largest express-delivery service by revenue, teamed up in May with UPS, which ranksfirst in the US package delivery business,to help restore earnings at DHL Express’ unprofitable US business.
A combined TNT and FedEx would claim 23 per cent of the European express-delivery market, compared with 24 per cent at DHL.