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posted by:
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Jan 13, 2016
FedEx

The merger of these two cargo giants is a good news or bad? Only the times will tell.

What is it?

In April 2015, the world heard for the first time about the FedEx and TNT US$4.8 billion deal. FedEx is taking over TNT, another giant in cargo carrier business around the globe.

The U.S. authorities approved this deal and recently, the European Commission has also unconditionally approved this deal. The EU Commission took less than two months to give its approval after U.S. authorities.

Is it a threat to competitors?

In Europe, Deutsche Post DHL sits at the first position and UPS at the second in the cargo business. The European Commission took its time to determine whether the merger of FedEx and TNT would pose any threat to its competitors including these two companies, and when there is no threat found, it approved the deal unconditionally.

The commission also stated that in Europe, the FedEx-TNT would have a “moderate” market position and that the customers will benefit by this new player.

The best thing about this merger is that TNT has one of the largest and extensive road network – making it possible to make door-to-door deliveries – and on the other hand, FedEx has the strongest air network, enabling it to deliver air cargo to Pakistan and rest of the world effectively and efficiently.

Now when FedEx will get the road connections of TNT, it will be in a better position to compete with DHL and UPS in Europe.

Did anyone else try to buy TNT?

Yes! In 2013, UPS made an attempt to purchase then struggling TNT but EU intervened as it was more concerned about the competition, thus the transaction was nixed.

According to The Wall Street Journal, the FedEx-TNT merger needs an approval from China as well and with its newly established antitrust authority, China can stop these mergers. But this doesn’t worry Fred Smith, CEO FedEx, as he remains confident of transaction to close by mid-year.

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