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Has FX delivered FedEx A Bargain?

07 April 2015 by lberuti

FedEx ( FedEx Corporation ) announced overnight their intention to take over TNT Express NV for €4.4bln. If it proves successful, this €8 per share offer will be less expensive in dollar terms than the failed bid of UPS ( United Parcel Service, Inc ) when they offered to pay €9.5 in 2013 for the same company. Only time will tell whether it will be a bargain in the long run, as TNT’s management stated a month ago that 2015 would be a “challenging year of transition”. But recent FX moves are undoubtedly presenting US corporates with acquisition opportunities in Europe. Undisputable winners of the deal are PNLNA’s ( PostNL NV ) debt holders though. PNLNA’s 14.7% stake in TNT should earn them €642m, which they said would be earmarked for debt reduction. That should translate into a material deleveraging, and the management should be in a position to achieve their target of a high BBB rating with both S&P and Moody’s. The market duly acknowledged and send PNLNA’s 5 year risk premium 9bps tighter at 60bps.