Why The FedEx-TNT Deal Makes Sense?

FedEx Corporation FDX announced today that it will be acquiring European rival TNT Express NV – ADR TNTEY in a $4.8 billion (4.4 billion euro) deal. Don Broughton, Avondale Partners, was on CNBC Tuesday to explain why the deal makes sense for both the companies and is most probably going to be completed successfully. FedEx Will Succeed Where UPS Failed "It (the deal) makes all kind of sense," Broughton said. Let's go back and remember that in 2012 UPS tried to buy this company for $6.7 billion and so for a 40 percent lower price, FedEx is going to buy them and I think they will be successful this time. Remember UPS was blocked by the EU (European Union). EU said that gave UPS too much of a monopoly, too much of a pricing power." He continued, "And UPS actually ironically tried to sell-off bit and pieces to FedEx and FedEx said we are not interested in helping you out here. UPS eventually had to pay a $200 million breakup fee [for] failed attempt to buy this company. FedEx's presence in Europe isn't quite nearly as deeper abroad as UPS's. So, I think they'll be successful in getting this deal done." TNT Is A Fixer-Upper Broughton was asked what his view on FedEx's stock was before this deal was announced. He replied, "I already had it rated Buy, would just continue that outlook. FedEx has been very good historically in buying companies." He also remarked, "FedEx is really good at buying Fixer-uppers and doing exactly that fixing them up and this is definitely a fixer-upper."