US package delivery group United Parcel Service Inc (NYSE:UPS) on Monday said the European Commission (EC) had notified it of plans to block its tie-up with Dutch express delivery company TNT Express NV (AMS:TNT) and will announce its formal decision in the coming weeks.
UPS, which agreed in March last year to take over TNT in a deal valuing the Dutch firm at some EUR5.16bn (USD6.9bn), said today that once the EC formalises its ruling against the deal, it will withdraw its offer for TNT and pay the Dutch target a EUR200m termination fee.
The US group proposed initial concessions on the transaction to the European regulator on 29 November 2012 and revised them twice since then. Its chairman and CEO Scott Davis said the proposed remedies were significant and tangible, while the merger would have transformed the logistics sector, providing important benefits to consumers and customers globally, supporting growth in Europe in particular.
Last week, the Financial Times cited EC’s commissioner Joaquin Almunia as saying that the planned merger of UPS and TNT posed serious competition problems, not easy to solve.
According to him, UPS needed to sell TNT assets to a player that could be an equivalent for TNT and had ground and air transport. French La Poste SA’s DPD unit, to which the US firm was trying to sell certain TNT assets, has no air transport of its own and therefore could not be an equivalent, Almunia has told the paper.
UPS, which planned to cover the TNT deal with existing cash and new debt, said today it would make further announcements regarding the transaction once the EC publishes its formal decision.