English Arabic Armenian Azerbaijani Chinese (Simplified) Chinese (Traditional) Czech Danish Dutch Estonian Filipino Finnish French Galician Georgian German Greek Hindi Hungarian Icelandic Indonesian Italian Japanese Korean Latvian Lithuanian Malay Maltese Norwegian Persian Polish Portuguese Russian Slovak Slovenian Spanish Swedish Thai Turkish Ukrainian Vietnamese

FedEx to succeed where UPS failed?

MEMPHIS: Rating agency Standard & Poor's (S&P) has confirmed its 'BBB' rating for FedEx Corporation with a 'stable' outlook following the announcement of the integrator's proposed US$4.8 billion takeover of TNT Express.

Assuming the European Commission has no objection, FedEx said it expects to finalize the purchase with $1.5 billion in cash and new debt by the first half of next year.

TNT Express truck 2According to S&P credit analyst Betsy Snyder: "Standard & Poor's ratings on FedEx reflect the company's improved credit metrics, bolstered by its ongoing efforts to increase profitability, which should cushion the effect of the incremental debt associated with the proposed acquisition."

The agency said it expects FedEx's ratio of debt to ongoing operations' revenue to fall from 35 to 30 percent at acquisition and then recover within two years as the company benefits from an increased European presence, cost synergies related to the acquisition, and a shift in its discretionary cash flow from share repurchases to debt reduction.

At the time of the US$6.8 billion UPS bid to acquire TNT Express in 2012, the two companies estimated cost savings of €400-€550 million as a result of any merger. The following year the deal was denied by the European Commission (EC) on the grounds that customers would be subjected to higher prices from a subsequent de facto express parcel duopoly of DHL and UPS. The Commission concluded that because FedEx held the smallest market share in all 29 European Economic Area countries, it would have been unable to provide sufficient competition.

TNT Express truck 1However with TNT's European road network connecting 41 countries via 19 hubs and over 540 depots, FedEx has the opportunity to reach 70 percent of customers overnight by truck rather than air – thereby satisfying the Commission's requirement for an express market operator to provide shippers with an enhanced, integrated global network without raising prices.

Notwithstanding unanimous support from both companies' boards for the deal, should TNT Express fail to merge for a second time following a possible EC objection, FedEx has agreed to pay a termination fee of €200 million – similar to that paid by UPS. However should TNT accept another offer in the next eight weeks that is in excess of €5.2 billion, it has agreed to pay FedEx €45 million in compensation should the integrator decline to match it.

S&P said it could raise its current rating for FedEx following any successful merger if the company manages to increase its operations' revenue-to-debt ratio from 35 to 40 percent by 2018.

FedEx and TNT Express said they intend to file a request seeking approval of the deal from the Dutch financial regulator - which includes finding a new owner/operator for TNT's air fleet - in the next six weeks. They added that current TNT CEO Tex Gunning and CFO Maarten de Vries are expected to stay in any post-merger company.

News

Written on 18/08/2017, 21:43
mexico-boosts-miami-air-cargo-volumeMIAMI: August 17, 2017. Miami International Airport has reported a 4.8 percent growth in cargo traffic for the first half of 2017 with domestic traffic...
Written on 17/08/2017, 18:44
turkish-cargo-helps-save-livesMOGADISHU: August 15, 2017. In March this year actor Ben Stiller and other celebrities launched a viral crowdfunding appeal on behalf of the famine in...
Written on 17/08/2017, 18:01
first-flight-out-for-hungarian-horsesBUDAPEST: August 15, 2017. Cargolux and Hellmann Worldwide Logistics have flown 14 Hungarian-bred racehorses from Budapest via Luxembourg and Beijing to...
Written on 11/08/2017, 15:35
european-commission-supports-hna-purchase-of-frankfurt-hahn-airportFRANKFURT HAHN: August 10, 2017. The HNA Group has completed its acquisition of Frankfurt-Hahn airport from the German state of Rhineland-Palatinate. The...
Written on 10/08/2017, 21:40
veteran-wins-fedex-grant-to-upcycle-military-surplusMEMPHIS: August 10, 2017. FedEx has awarded the Grand Prize in its 2017 small business grant competition to Sword & Plough founders Emily Núñez...
Written on 10/08/2017, 15:39
fortune-50-companies-back-no-fee-recruitment-in-supply-chainsNEW YORK, NY: AUGUST 07, 2017. Ford, General Motors, Hormel Foods, Marriott Hotels and Michael Kors have agreed to promote ethical labor policies in their...
Written on 08/08/2017, 02:14
matson-to-add-marshall-islands-serviceHONOLULU: AUGUST 07, 2017. Matson is adding to its Marshall Islands (RMI) service in the first quarter of 2018 with a new biweekly sailing from...
Written on 04/08/2017, 20:56
xpo-on-the-m-a-road-againGREENWICH, CT: August 04, 2017. XPO Logistics has reported a net income of US$73.2 million on revenue of US$7.3 billion for the first six months of...
Written on 03/08/2017, 17:48
ups-provides-logistics-key-to-circular-business-solutionATLANTA: August 02, 2017. UPS is helping New Jersey-based Terracycle turn hard-to-recycle items into trashcans and park benches while diverting 40 million...
Written on 03/08/2017, 13:50
hyperloop-one-lifts-offNEW YORK: August 02, 2017. Following a successful first test last month, the vacuum transport system built by Hyperloop One has now reached a speed of 192...
Written on 02/08/2017, 16:28
no-american-investment-from-qatar-airwaysDOHA: August 02, 2017. Qatar Airways is not proceeding with its initial 7.5 percent "passive" stake in American Airlines (AA) for an estimated US$808...
Written on 28/07/2017, 20:54
turkey-logistics-investment-continuesISTANBUL: July 27, 2017. Private equity manager Abraaj Group has acquired an unspecified "significant minority" stake in Netlog Lojistik Hizmetleri, one...
Written on 27/07/2017, 17:55
supply-chain-staff-crisis-warns-dhlBONN: July 26, 2017. A report sponsored by DHL Supply Chain into a shortage of industry talent says as much as a third of the current workforce is at or...
Written on 25/07/2017, 20:14
dp-world-australia-wins-cosco-endorsementSYDNEY: July 25, 2017. DP World Australia has set up a logistics stevedoring subsidiary DP World Logistics Australia and full-service container park...
Written on 25/07/2017, 19:40
bollore-signs-new-cameroon-concessionKRIBI, Cameroon: July 25, 2017. CMA CGM and Bolloré Transport & Logistics have signed a 25-year concession to manage a new container terminal at the...
Written on 21/07/2017, 19:35
new-india-tax-will-mean-savings-say-expertsDELHI: July 21, 2017. The implementation of a new Goods and Services tax (GST) in India, as a replacement for a myriad of local and state levies, has...
Written on 20/07/2017, 22:27
america-s-largest-trade-gateway-aims-for-near-zero-emissionsSAN PEDRO BAY, CA: July 19, 2017. The ports of Los Angeles and Long Beach, America's two largest ports, have published a plan to reduce trucks and...
Written on 19/07/2017, 17:41
post-brexit-britain-to-rely-on-emerging-marketsBAAR, Switzerland: July 19, 2017. As Britain's Conservative government acknowledges the one-time cost of leaving the EU could be £66 billion, Agility...
Written on 18/07/2017, 18:26
politics-not-economics-key-to-inequality-says-researchBOSTON: July 17, 2017. Research by Oxfam suggests the poorest half of the world's population has received one percent of the total increase in global...
Written on 14/07/2017, 19:08
first-circular-economy-msc-launchedCRANFIELD, UK: July 14, 2017. Cranfield University is launching the world's first MSc course on the circular economy in October. The part-time...

- powered by Quickchilli.com -