United Parcel Service (UPS) and TNT Express have been informed by the European Commission (EC) that it is working on a decision to prohibit the proposed acquisition of TNT Express.
The EC has raised a number of concerns about the merger, to which UPS submitted an initial remedies proposal on 29 November 2012 and subsequently revised the proposal twice. UPS began the competitive review process with the EC in March 2012.
UPS chairman and CEO Scott Davis said: “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.”
Upon prohibition by the EC, the offer condition relating to EU Competition Clearance will not be fulfilled and UPS will pay TNT a termination fee in the amount of EUR 200 million and will withdraw the offer.
Further announcements will be made once the European Commission has issued its formal decision. The decision is expected to be adopted formally in the coming weeks.
“I would like to thank TNT Express for its 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.
“Looking ahead, our company focus will be on the continued execution of our growth strategy. While we viewed the acquisition as a compelling growth platform, our financial strength allows UPS to capture future opportunities.”
TNT Express also expressed regret at the situation, having believed the merger was feasible and beneficial for all stakeholders.
Rebuilding the brand
TNT Express’ Executive Board and Supervisory Board say they recognise the protracted merger process has been a distraction for management. Therefore, management will now solely focus on:
Reassuring customers of TNT Express’ commitment to providing industry-leading services.
Ensuring engagement and commitment of employees.
Strengthening its strategy, including further steps to improve profitability.
Management will provide an update on its strategy in due course.
