The European Commission has informed United Parcel Service Inc. that it intends to block the Atlanta-based company’s purchase of TNT Express, a Dutch shipping firm through which UPS planned to gain a stronger foothold in the market, UPS said Jan. 14.
UPS announced its intention to buy TNT for nearly $7 billion in March 2012 and put forth a plan to address the commission’s antitrust concerns on Nov. 29. The proposal was revised twice but didn’t satisfy the commission, UPS 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,” said Scott Davis, UPS chairman and CEO, in a statement. “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.”
The failed bid will cost 200 million euros ($267.46 million), which UPS is required to pay directly to TNT as a termination fee when it withdraws the offer.
At the time of the acquisition, UPS leaders said it would enhance its express and logistics capabilities in Europe, boost its operations in Asia and Latin America and save the combined companies $525 million to $725 million per year.
It was the right time for the deal, with assets depressed in Europe while intra-European trade was hitting all-time highs, Kurt Kuehn, UPS’s chief financial officer, said last May at an economic forecasting event.
“Certainly the economy isn’t booming, but Europe is trading with itself in a way that it never has before,” said Mr. Kuehn, who admitted that UPS’s purchase of a $9 billion company in Europe left some shareholders “scratching their heads.”
The commission hasn’t officially squelched the deal, but a formal decision is expected in the coming weeks, according to UPS.
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