Foo Yun Chee Brussels
EU antitrust regulators have blocked a e5.2 billion (R64bn) bid by United Parcel Service (UPS) for TNT Express, denting the largest package delivery company’s hopes of expanding its presence in Asia and Latin America.
The EU regulatory veto means UPS may now have to grow via smaller acquisitions or organically, while TNT could come under pressure to change management or revise its business strategy to deflect activist shareholders.
The European Commission said yesterday that the US company had not offered adequate concessions to ensure that the deal would not hurt consumers. UPS had flagged the negative decision on January 14, saying it would withdraw its bid because of opposition from the EU regulator.
The deal would have given UPS access to Dutch peer TNT’s stronger networks in fast-growing Asian markets and Latin America and increased its non-US revenues to 36 percent of total sales from the current 26 percent.
The European Commission said the proposed merger would have reduced competition in 15 EU countries.
“[The merger] would have drastically reduced choice between providers and probably led to price increases,” EU competition commissioner Joaquin Almunia said.
UPS had offered to sell TNT operations in 15 countries, mainly in eastern Europe, with the principal potential buyer France’s DPD, but failed to win over the commission.
TNT is the leading postal delivery company in Europe, with 18 percent of the market against the 10 percent of UPS. Deutsche Post’s DHL unit has 15 percent while FedEx is a distant fourth player.
TNT shares fell 2.5 percent to e5.56 by 11.39am in Amsterdam. – Reuters