FedEx to buy France’s TATEX to expand in Europe

Reuters: FedEx Corp said last week its Express arm will buy privately held French package delivery company TATEX to expand its express delivery network in Europe.

Terms of the deal were not disclosed. TATEX, with a central hub near Paris, employs more than 1,000 people and carries 19 million packages a year. Its annual revenue is about 150 million euros ($194 million).

FedEx, the world’s No. 2 package delivery company, has said it plans to grow organically and through small “tuck-in” purchases in Europe.

In March, FedEx beat Wall Street’s quarterly profit estimate but lowered its outlook for the rest of the year based on tepid economic growth and expectations of a mild euro zone recession.

FedEx’s gradual expansion comes as No. 1 package delivery group United Parcel Service Inc is in the midst of its purchase of Dutch peer TNT Express NV for about $6.8 billion, the largest takeover in FedEx’s nearly 105-year history.

“The TATEX business complements FedEx existing operations in the French market, and will enable the company to provide additional local services in one of Europe’s largest geographies,” Chief Executive Fred Smith said in a statement.

He said the takeover shows “we are continuing to systematically and strategically invest in growing our network” in Europe, the Middle East, Indian subcontinent and Africa (EMEA) region.

FedEx entered the French market in 1985 and employs more than 3,000 people there. It expanded its EMEA hub at Paris’ Roissy Charles de Gaulle Airport in 2009, making it the biggest FedEx Express hub outside of the United States.

Analysts at Stifel Nicolaus estimated the TATEX purchase in the range of $75 million to $120 million, at most. “While UPS tries to figure out how to integrate its European operations with those of TNT, we prefer to own FedEx, which should have a much easier time growing with these smaller, less risky integrations,” the analysts said in a note.

Last month FedEx said it would buy family-owned Polish shipping company Opek, also for undisclosed terms.

Separately FedEx said its Office unit will sell the Japanese operations, including 61 printing centers, to Konica Minolta for $44 million. The transaction will close on or about May 31 after regulatory approval, FedEx spokesman Jess Bunn said.