Confirming media speculation, U.S. logistics giant FedEx Corp. (FDX) and European peer TNT Express N.V. (TNTEY.PK) Tuesday said they have reached an agreement for FedEx to buy TNT for an all-cash public offer of 8 euros per TNT share. The transaction represents an implied equity value of 4.4 billion euros or $4.8 billion for TNT Express.
Frederick Smith, Chairman and CEO of FedEx, said: "We believe that this strategic acquisition will add significant value for FedEx shareowners, team members and customers around the globe. This transaction allows us to quickly broaden our portfolio of international transportation solutions to take advantage of market trends - especially the continuing growth of global e-commerce - and positions FedEx for greater long-term profitable growth."
The offer represents a premium of 33 percent over TNT's closing price of 6 euros per share in Amsterdam on April 2, and a premium of 42 percent over the average volume weighted price per TNT share of 5.63 euros over the last three calendar months.
The transaction has been unanimously recommended by TNT Express' Executive Board and Supervisory Board. PostNL N.V. also has irrevocably confirmed to support the offer and tender its 14.7 percent shareholding in TNT. The offer is expected to close in the first half of calendar year 2016.
FedEx, which currently has only restricted reach in Europe,expects the deal to transform its European capabilities and accelerate global growth.
The European regional headquarters of the combined companies will be in Amsterdam/Hoofddorp.TNT hub in Liege will be maintained as a significant operation for the group in future. TNT's airline operations will be divested, in compliance with applicable airline ownership regulations.
FedEx has agreed to respect the existing employment terms of TNT Express. The combined companies have decided to cooperate to avoid any significant redundancies in the global or Dutch work forces.
FedEx plans to finance the deal by utilizing available cash and existing and new debt arrangements. The transaction will have no financing contingencies.
The U.S. logistics giant has a market capitalization of $47 billion, solid investment grade credit rating and ample available liquidity.
TNT has been going through troubled times. A $6.9 billion offer from United Parcel Service, Inc. (UPS) had fallen apart in early 2013, as regulators in the European Union blocked the deal. UPS was unable to find a buyer for certain parts of TNT that would have appeased anti-trust concerns.
FDX closed Monday on the NYSE at $166.67, up 0.3 percent from the previous close.
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