UPS takeover of TNT Express collapses

[POSTMAN]

http://www.ft.com/cms/s/0/42991410-5e1d ... z2HwahL4Pf" onclick="window.open(this.href);return false;


The proposed €5.2bn takeover of Dutch delivery group TNT Express by UPS has collapsed after the European Commission indicated it would block the deal.

The news sent shares in TNT Express down 49 per cent in early Amsterdam trading as the nine-month courtship appeared all but over, marking one of the biggest transactions that the commission has ruled against.

Although UPS sees no realistic prospect of the deal being cleared, formal termination of the agreement with TNT Express will occur once Brussels has officially blocked the deal.

A commission spokesperson said: “The commission will take its decision by February 5.”

The US logistics group had offered to sell assets in European markets to competitors – first to FedEx and then to French delivery company DPD.

But Europe’s antitrust regulator believed the takeover would have left many European markets with only two “integrators” – companies that combine air and road delivery capacities – leaving customers with too little choice. It concluded that gaps in the FedEx network in Europe would leave the combined UPS-TNT Express as one of only two groups serving many markets.

Brussels has only blocked 22 mergers and acquisitions deals since the introduction of merger control rules in 1989. Joaquín Almunia, the EU competition chief, would require the approval of the college of EU commissioners to block the UPS-TNT Express deal. However it is extremely rare for a draft prohibition decision to be overturned.

UPS had been scrambling to put in place a package of remedies to win approval, which involved selling to DPD a portfolio of assets across Europe and giving it rights to buy space on the UPS airline. However the deal was extremely complex and included a host of uncertainties, such as whether DPD had the capacity and will to challenge the likes of DHL and UPS in express delivery over the long term.

As a result of these concerns, Mr Almunia called for assurances on the terms of the assets sale and the intentions of the buyer – a demand that UPS and DPD had little time to address.

Scott Davis, UPS chief executive, said the company had “proposed significant and tangible remedies” for the commission’s concerns and that the transaction “would have been transformative for the logistics industry”.

UPS will pay TNT Express a break fee of €200m as a consequence of withdrawing the offer.

The failure of the deal is a blow to UPS’s ambitions to gain a stronger foothold in the European market.

It leaves TNT Express, the world’s fourth-largest parcel group, without a clear strategy. The company was created in a demerger from its former parent company TNT in 2011 – with the purpose of making a merger with UPS or FedEx attractive.

Bernard Bot, TNT Express’s acting chief executive, said the company would “focus on executing our existing strategy” and that the company would release a new strategic review “in due course”.

TNT Express’s sale of its airline to ASL Aviation, which was conditional on the merger’s approval, will be cancelled.

Shares in PostNL, the former mail delivery monopoly and the Dutch logistics group’s biggest shareholder, declined 33 per cent in Amsterdam.

[TrueBlueTerrier]

TNT-UPS merger collapses in boost for Royal Mail http://www.standard.co.uk/business/busi ... 50743.html" onclick="window.open(this.href);return false;

Royal Mail received a much-needed boost today as United Parcel Services, the world’s largest deliverer of packages, dropped a €5.2 billion (£4.3 billion) takeover bid for Dutch rival TNT Express after it became clear that it would be blocked by European regulators.

The pull-out saw TNT’s shares halve in value, with industry experts questioning the company’s future despite the fact that it is the market leader in Europe.

A combined UPS and TNT would have held 35% of the UK parcels market and would have been a formidable competitor to Royal Mail. It is believed that UPS suggested selling parts of the merged business to Royal Mail in a bid to get round European Commission competition worries.

Ahead of Royal Mail’s planned privatisation, chief executive Moya Greene has been pushing its parcels arm and express delivery — where a united TNT-UPS would have offered stronger competition — to promote its commercial future.

UPS had wanted to buy TNT to help it expand in the faster-growing Asian and Latin American markets using the Dutch firm’s networks. But TNT has been struggling for several years in its markets closer to home.

TNT Express shares, which were briefly suspended when the market opened, fell as much as 50% to €4.05, compared with the UPS offer price of €9.50 per share.

UPS will pay TNT a fee of €200 million for breaking the takeover deal. But that will be little compensation for the business which made losses of €3 million in the third quarter of 2012 on revenues of €1.8 billion.

Chief executive Marianne-Christine Lombard quit TNT in September part-way through the bid, and came under heavy criticism for bailing out when the deal looked to be in trouble. She had stood to make a €2.6 million bonus if the takeover had gone through.

UPS had made a number of offers to the European Commission, including selling off parts of the small packets business and opening up the two carriers’ airline networks to rivals. But a meeting with the commission at the end of last week made it clear the deal would be blocked.

“We proposed significant and tangible remedies designed to address the EC’s concerns with the transaction,” Scott Davis, UPS chairman and chief executive, said in a statement, expressing disappointment at the decision after months of talks.

“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.”