United Parcel Service (UPS) said on January 14 it was “extremely disappointed” to learn that the European Commission (EC) intended to disapprove its takeover bid of TNT Express, adding it plans to withdraw its buyout offer.
In a statement, UPS said the commission informed the U.S.-based package delivery giant and the Dutch express delivery service TNT Express that it was “working on a decision to prohibit the proposed acquisition of TNT Express.”
“We are extremely disappointed with the EC’s position. We proposed significant and tangible remedies designed to address the EC’s concerns with the transaction. The combined company would have been transformative for the logistics industry, bringing meaningful benefits to consumers and customers around the world, while supporting growth in Europe in particular,” Scott Davis, UPS chairman and CEO, said.
Upon formal prohibition by the commission, UPS said it would withdraw its offer and pay TNT a termination fee of EUR200 million (US$267 million).
UPS submitted an initial remedies proposal on November 29, 2012 and subsequently revised the proposal twice. The proposal was in response to the EC’s statement of objections in October last year on the possible adverse effects of the merger on the international express small package market in Europe.
In March last year, Atlanta-based UPS offered to purchase TNT Express for EUR5.16 billion ($6.9 billion). The buyout of Europe’s second largest package delivery service by the world’s biggest would pave the way for greater access by UPS into the European market.
But approval by the EC of the proposed merger had dragged amid worries of antitrust violations. The acquisition would reduce to three the top four players in the European express delivery sector. The two others are DHL Express and FedEx Express.
Further announcements will be made once the European Commission has issued its formal decision, UPS said in today’s statement. The decision is expected to be adopted formally in the coming weeks.
“I would like to thank TNT Express for their shared vision of the value we would have created for our customers, shareholders, and employees, and for the significant efforts they made over the past year,” Davis said.
“Looking ahead, our company focus will be on the continued execution of our growth strategy,” he added. “While we viewed the acquisition as a compelling growth platform, our financial strength allows UPS to capture future opportunities.”
Photo: Ack Ook