FDX FedEx Corp

   (FROM THE WALL STREET JOURNAL 1/9/16) 
   By Tom Fairless and Laura Stevens 

BRUSSELS -- European Union regulators have unconditionally approved FedEx Corp.'s acquisition of Dutch parcel company TNT Express NV, ending a six-month antitrust investigation that was one of the biggest hurdles facing the nearly $5 billion deal.

The merger, announced in April, would hand FedEx an extensive ground network in Europe, making it a bigger player in the burgeoning e-commerce market.

The approval had been expected since FedEx said in October that European regulators wouldn't challenge the transaction. That was seen as an unexpectedly easy pass from Europe's antitrust police, who had blocked a similar deal between United Parcel Services Inc. and TNT in 2013.

It is welcome news for FedEx, which suffered a black eye over the holidays, as it said last-minute online orders and severe weather resulted in some packages arriving late.

FedEx, which is based in Memphis. Tenn., is still awaiting approvals for the TNT deal from several countries, most notably China and Brazil. U.S. regulators approved the merger last year.

China has emerged as something of a wild card for deal-makers world-wide. Experts say the country's newly established antitrust authority considers issues that go beyond traditional competition law, including whether deals may harm Chinese national economic development. It also has a smaller staff than many of its peers.

As a result, China has held up some mergers for months after they were approved by U.S. and EU antitrust authorities, including Microsoft's Corp.'s $5.85 billion acquisition of Nokia Corp.'s handset business.

Analysts largely expect FedEx to receive clearance from the remaining countries, and FedEx said it is confident it will close the deal in the first half of the year.

On an analyst call last month, FedEx Chief Executive Fred Smith said TNT would be a welcome addition to the company's portfolio amid a global economic slowdown. "Despite contraction of U.S. exports due to the high U.S. dollar and low world [economic] and trade growth, the overall market for international door-to-door express continues to increase, also driven by e-commerce," he said.

Up until now, FedEx has largely focused on delivery services in and out of Europe, with limited shipping options between countries within the region. Combining the two networks will make it the third-largest player in Europe's international express-delivery market, behind Deutsche Post AG's DHL and UPS. Its step-up in ground delivery will allow it to better compete for e-commerce shipments.

The European Commission opened a full investigation into the deal in July, warning that a merger could lead to insufficient competition on certain parcel delivery routes and, thus, higher prices for businesses and consumers.

But on Friday, the regulator said it had concluded that the delivery companies weren't particularly close competitors in Europe and that the merged entity would "continue to face sufficient competition from its rivals."

"We are extremely pleased to receive the European Commission's unconditional approval," said David Binks, FedEx's regional president for Europe. He said the deal would "provide significant value to the employees, customers and shareholders of both companies."

EU antitrust chief Margrethe Vestager said her agency had "thoroughly assessed the markets affected" by the deal due to the importance of affordable package delivery for many businesses and consumers, particularly in the burgeoning e-commerce market.

"The conclusion is that European consumers will not be adversely affected by the transaction," Ms. Vestager said.

Executives at both companies had maintained the deal was substantially different from UPS's attempt because FedEx's operations in Europe are much smaller than those of its Atlanta-based rival.

UPS had revised its 5.2 billion euro proposal -- then valued at nearly $7 billion but now $5.63 billion -- three times and made plans to create a pan-European competitor in the overnight-parcel-delivery market, but still failed to satisfy the EU's concerns.

(END) Dow Jones Newswires

January 09, 2016 02:47 ET (07:47 GMT)

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