FROM the rubble can, sometimes, come opportunity. For Robert Peto, formerly finance director of collapsed delivery business City Link, an opportunity has come along that he has grasped.
Peto has joined TNT UK, a major rival to City Link, as its FD. At the time of City Link’s demise at Christmas, TNT reached out more widely than just its head of finance – publicly calling on City Link staff to fill a number of vacancies in its warehouses or as drivers. Peto had served as City Link’s FD for three years,
He hasn’t joined TNT for the quiet life. For starters, the business has been undergoing a global restructuring and transformation plan announced in 2014, known as Outlook, to make fundamental improvements to the way it
In February, TNT global CEO Tex Gunning said it had “put in place” the building blocks of productivity and efficiency plans. Its full-year revenues were up 1.7% to €1.8bn (£1.3bn), with an operating loss of €53m – incorporating €100m in costs and impairment charges relating to its change. Increased competition on delivery is an ongoing pressure. However, this plan now may change.
A €4.4bn deal for the purchase of TNT by FedEx has been conditionally agreed, it was announced in early April – days after Peto’s appointment. So will Peto have a different set of criteria to meet if a deal goes through? Yes, it seems very likely.
The strategic rationale behind a merger would normally discuss driving efficiencies, particularly on staffing in two huge businesses. However, both parties argue that such a move is not a huge focus.
“The combined companies will cooperate to avoid any significant redundancies in the global or Dutch workforces,” they said in their deal statement. “The combined companies will foster a culture of excellence, where qualified employees will be offered attractive training and national and international career progression based on available opportunities.”
FedEx chairman and CEO Frederick Smith said the deal will add “significant value” for its shareholders, staff and clients: “This transaction allows us to quickly broaden our portfolio of international transportation solutions to take advantage of market trends – especially the continuing growth of global e-commerce – and positions FedEx for greater long-term profitable growth.”
With TNT in the midst of transformation, and the deal set to create more change, Peto will need to call on all his experience to manage the UK operations.
He has served in senior roles with both Parcelforce and Geopost UK. On his appointment, he said it was “an exciting time for TNT in the UK and globally”. His LinkedIn profile cites skills in “significant” working capital improvement and “dramatic” profit turnaround.
Peto’s role at TNT UK will be vital as far as the FedEx deal is concerned, because FedEx is looking to increase its market share in the European market. The lack of European focus is, perhaps, a reason why efficiencies driven by integration are not core to the deal – as such, the deal price is significantly lower than the failed UPS/TNT deal of 2013.
Concerns over competition, which scuppered the UPS deal, should be assuaged by FedEx’s relatively lower European profile. Ironically, FedEx’s weakness supposedly contributed to the UPS/TNT deal being thrown out.
Helping derive a return from the deal will also be a key aspect of Peto’s role, as the transaction value offers a 42% premium over the average weighted TNT share over the past three months.
Jon Downing retires as TNT UK finance chief after 30 years.