UPS to drop TNT Express bid on EC veto expectation
United Parcel Service Inc said it would drop its 5.2-billion euro ($7 billion) bid for Dutch delivery firm TNT Express on the expectation of an EU veto, a sharp blow that halved the value of TNT’s shares within minutes.
US-based UPS, the world’s No. 1 package delivery company, had sought to buy the Dutch firm to gain access to its European network and business in fast-growing Asia and Latin America.
The collapse of the deal is particularly damaging for TNT Express, which has struggled to turn around in a weak European market and will have trouble regaining market share, believed to have been eroded during the talks with UPS.
The plunge in its share price wiped more than 2 billion euros off its value.
UPS would also have to adjust to the loss of opportunity, said Philip Scholte at Rabobank: “This is going to make it hard for UPS to increase its position in Europe on its own.”
UPS and TNT Express said the European Commission, the EU's executive body, had told the two firms it was working on a decision to prohibit the proposed acquisition, leaving them no choice but to abandon it. “UPS will pay TNT a termination fee in the amount of 200 million euros and will withdraw the offer,” once the formal decision is taken, UPS said on Monday.
The European Commission declined to comment. EC competition policy spokesman Antoine Colombani said the decision would be taken in “due
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