FedEx closes purchase of TNT

Deal makes Memphis firm Europe’s No. 2 parcel carrier

FedEx closed on a landmark deal Wednesday to buy TNT Express and its European road delivery network for $4.9 billion.

The Memphis-based company’s biggest acquisition in 43 years is expected to extend a surge in earnings as its market share rises in Europe. The deal makes FedEx the continent’s No. 2 parcel carrier.

Analysts believe TNT won’t immediately boost FedEx’s bottom line, because of costs of integrating and upgrading the European operation. But they expect a long-term earnings addition of about $1.50 a share, or more than 10 percent by 2018.

The transaction has been likened to FedEx’s 1998 purchase of Caliber System/Roadway Package System, the basis for U.S. parcel delivery business FedEx Ground. FedEx Ground competes head to head against United Parcel Service and has consistently been one of FedEx’s most profitable operating units in recent years, in large part due to burgeoning ecommerce.

“This acquisition is a significant accomplishment and marks the beginning of a new era, filled with promise for our people, customers and shareowners,” said FedEx chairman Frederick W. Smith. “We are proud to celebrate the joining of two iconic companies and the approximately 400,000 team members who are committed to serving customers around the world.”

“The timing of this historic event is important, particularly in the current market environment where global e-commerce is growing at double-digit rates,” Smith added. “Adding TNT’s capabilities to our existing world-class suite of services, including GENCO and the recently relaunched FedEx CrossBorder, will further expand the ability of FedEx to support business connections around the world.”

The TNT road network, which connects 40 countries across a continent with an estimated 741 million people, expands FedEx’s reach in a market