UPS set to withdraw bid for TNT Express
THE HAGUE - Agence France-Presse
UPS’s CEO Scott Davis speaks on the planned merger with TNT in a file photo.U.S. delivery company United Parcel Service (UPS) abandoned yesterday its 5 billion euros bid for Dutch firm TNT Express because of objections from EU competition authorities, TNT Express said and TNT shares immediately lost half their value.
TNT stated that UPS had agreed to pay it a termination fee of 200 million euros, but the price of TNT Express shares crashed by just over 50 percent in initial trading on the Amsterdam stock exchange.
“UPS informed TNT Express that UPS sees no realistic prospect that European Commission clearance can be obtained and that UPS will not pursue the transaction on any other basis,” TNT Express said in a statement from Hoofddorp in the Netherlands.
The decision is despite an attempt by UPS last year to overcome competition concerns by amending its 5.16-billion Euros ($7.03 billion) bid.
European Union (EU) competition authorities had warned that the takeover as constructed would result in damaging concentration in the European market for express delivery.
EU competition officials met UPS and TNT Express representatives on Jan. 11. They informed the companies that on the basis of UPS’s current remedy proposal it is working towards proposing a prohibition decision, TNT Express told.
UPS then told TNT it would not continue chasing the deal and that formal termination of the merger protocol will occur upon receipt of the prohibition decision of the EC, which TNT Express deems inevitable, TNT Express said.
The Dutch group however said it regretted UPS’s announcement, with spokesman Cyrille Gibot.
“We thought the merger was possible. UPS was leading the process and we did everything we could to support UPS to get clearance. TNT would now focus on a ‘standalone strategy’ but that “the goal was clearly to complete the merger.”
In June 2012, UPS launched a bid to take over TNT Express, but the EU competition authorities announced a month later that they would investigate the deal.
The EU said it was worried that the proposed merger would reduce the number of competitors from four to three and lead to a highly concentrated market for domestic and international express delivery services on the European continent.
The deal was expected to put UPS ahead of its two competitors as it would strengthen its position in Europe and globally.
UPS and TNT Express are major players in the sector for delivery of small packages and are two of four firms with a comprehensive air and road delivery network on the continent.
TNT Express is a global player operating in more than 200 countries.