TNT, Europe's second-biggest express-delivery company, rose yesterday by a record 29 percent in Amsterdam trading after the Financial Times reported that United States competitor FedEx Corp may make a takeover bid.
TNT advanced as much as 5.39 euros to 23.90 euros, the biggest gain since the Netherlands-based company's June 1998 initial public offering, and was up 26 percent as of 10:20am. The increase pared the stock's decline this year to 18 percent, valuing TNT at 8.82 billion euros (US$14 billion).
FedEx, the second-largest US package-shipping company, is in preliminary talks to buy TNT, the Financial Times said on Saturday. Rising fuel costs and an economic decline revived merger discussion between FedEx and TNT, the UK newspaper reported. Buying the Dutch operator would make FedEx the No. 2 express-delivery service in Europe.
"The shares have underperformed recently, reflecting near-term economic concerns in Express, and are not in our view discounting a potential takeover," Samantha Gleave, a London-based Merrill Lynch analyst, said in a research report obtained by Bloomberg News.
FedEx posted its first quarterly loss in 11 years last month and projected earnings that fall short of analysts' estimates as spending on fuel rises and a slowing US economy curbs demand.
TNT said last month that rising fuel prices and waning US economic growth aren't hurting its express-delivery division as the company imposes higher fuel surcharges for customers, transports as much as possible by road rather than air and has a small operation in the US.
An acquisition of TNT would increase competition with DHL Express, the express-delivery business owned by Bonn-based Deutsche Post AG, Europe's biggest mail carrier. Deutsche Post teamed in May up with Atlanta-based United Parcel Service, which ranks first in the US package delivery business, to help restore earnings at DHL Express's unprofitable US business.
A combined TNT and FedEx would claim 23 percent of the European express-delivery market, compared with 24 percent at DHL, according to estimates by Damian Brewer, an analyst at JPMorgan Chase & Co in London.
TNT sold its logistics and freight-management businesses to expand mail and parcel-delivery services in Europe, Latin America and Asia. The company, which traces its origins to the 1752 founding of the Dutch postal service, gets only about 2 percent to 3 percent of total express-delivery volumes from the US.