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UPS-TNT Express deal breaks down on EC objections


ATW Daily News by Alan Dron 14 Jan. 2013

US freight giant United Parcel Service (UPS) has scrapped its takeover of European rival TNT Express after the European Commission (EC) said it would block the deal.

Netherlands-based TNT Express said Monday the two companies met the EC case team investigating the proposed acquisition Jan. 11.

“The case team informed the companies that on the basis of UPS’s current remedy proposal it is working towards proposing a prohibition decision,” it said in a statement. “Subsequently, UPS informed TNT Express that UPS sees no realistic prospect that EC clearance can be obtained and that UPS will not pursue the transaction on any other basis. Formal termination of the merger protocol will occur upon receipt of the prohibition decision from the EC, which—based on the above—TNT Express deems inevitable.”

In October, the EC lodged a statement of objections related to the “competitive effects” of the companies’ pending merger, which the two companies failed to satisfactorily remedy.

Although details of the remedy remain largely confidential, TNT Express spokesman Cyrille Gibot told ATW it involved UPS divesting certain business activities.

In November, TNT Express agreed to sell its two airlines to ASL Aviation Group to overcome ownership restrictions triggered by the planned merger. “That deal was conditional on the overall [acquisition] agreement, so we can say it is off the table,” Gibot said.

TNT Express said in a statement it regretted the situation, “having believed the merger was feasible and beneficial for all stakeholders. UPS has confirmed to TNT Express payment of the agreed €200 million ($267 million) termination fee.”

An EC Competition Commission spokeswoman declined to comment Monday, other than saying its formal decision on the proposed acquisition is due before Feb. 5.

The proposed €5.16 billion ($6.9 billion) acquisition, which was revealed in March 2012, would have reduced the four global express freight carriers—UPS, TNT Express, FedEx and DHL Express—to three.

bron/source: www.atwonline.com