United Parcel Service is to withdraw its bid for TNT Express after being told that the European Commission plans to prohibit the deal.
UPS said it had submitted an initial remedies proposal on 29th November and subsequently revised the proposal twice. UPS began the competitive review process with the EC in March 2012.
Scott Davis, UPS chairman and chief executive officer 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.
UPS said further announcements would be made once the European Commission had issued its formal decision. The decision is expected to be adopted formally in the coming weeks.
“I would like to thank TNT Express for their 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,” said Davis.
“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 said in a statement that it regretted this situation, having believed the merger was feasible and beneficial for all stakeholders. UPS had confirmed to TNT Express payment of the agreed €200m termination fee.
The executive board and supervisory board recognised the protracted merger process had been a distraction for management, it said. Management would 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. The executive board and supervisory board of TNT Express acknowledge the great value of the company’s operations, people and commercial proposition, and are confident its strategy will bring value to shareholders.”