EC Anti-trust Concerns Scupper UPS Takeover Bid for TNT
US delivery group United Parcel Service (UPS) has abandoned its €5.2bn takeover bid for Dutch group TNT Express on expectations that the European Commission (EC) will block the proposed deal.
Although the EC indicated that it would make its decision by 5 February, UPS said it was unrealistic to expect that the acquisition could still go ahead. This follows an indication from the authorities late last week that they were unlikely to authorise it, despite the group making concessions since last March when it first agreed to buy TNT. Although Joaquín Almunia, the EU competition chief, requires the approval of the college of EU commissioners to officially block the UPS-TNT deal it is rare for a draft prohibition decision to be overturned.
UPS had offered to sell assets in the European markets to competitors, initially to Federal Express (FedEx) and subsequently to French delivery firm DPD, in an effort to satisfy the EC. However, the concessions apparently were not enough to allay concerns that a deal would leave UPS with only two main competitors in Europe, creating a highly concentrated market for domestic and international express delivery services.
“We are extremely disappointed with the EC’s position. We proposed significant and tangible remedies designed to address its concerns with the transaction,” says UPS chief executive officer (CEO) Scott Davis.
UPS, which is already the world’s biggest logistics company, would have moved ahead of Germany’s DHL, owned by Deutsche Post, to also become Europe’s largest shipper had the TNT deal been approved.
Brussels has only blocked 22 proposed merger and acquisition (M&A) deals since the introduction of merger control rules in 1989. Mining group BHP Billiton abandoned a planned takeover of rival Rio Tinto in 2008 after the Commission raised concerns over the resulting lack of competition in Europe and last February it blocked a merger between Deutsche Boerse and NYSE Euronext, saying it would have created a near-monopoly in European financial derivatives.