UPS scraps purchase of Dutch delivery firm
by David Koenig and Toby Sterling
Associated Press Writers
January 14, 2013 11:36 PM | 1195 views | 1 1 comments | 5 5 recommendations | email to a friend | print
A TNT  truck leaves the main depot in Hoofddorp, near Amsterdam, Netherlands. United Parcel Service Inc. has ditched its $6.9 billion takeover of TNT Express NV after learning that European regulators would reject the deal in its current form.
A TNT truck leaves the main depot in Hoofddorp, near Amsterdam, Netherlands. United Parcel Service Inc. has ditched its $6.9 billion takeover of TNT Express NV after learning that European regulators would reject the deal in its current form.
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UPS scrapped plans to grow in Europe through the acquisition of Dutch delivery company TNT Express because European regulators were getting ready to reject the $6.9 billion deal.

It would have been the largest acquisition in UPS history.

Atlanta-based UPS had offered in March to buy TNT, Europe’s second-largest delivery company, to better compete with Europe’s largest, Deutsche Post’s DHL. Regulators objected, saying the deal would reduce competition in the market for express delivery of small packages in Europe. UPS said Monday that it had proposed “tangible remedies,” but after meeting with regulators on Jan. 11, the company told TNT it saw no prospect of the deal being approved.

UPS CEO Scott Davis said in a statement Monday that he was “extremely disappointed” with the stance taken by regulators. Shares of United Parcel Service Inc., the world’s largest package delivery company, rose 1.5 percent to $79.06 in midday trading in New York today.

Analysts said UPS could still pursue smaller acquisitions and also might boost its dividend or take some other action to reward shareholders.

TNT shares plunged in Europe. Although it will receive a $265.5 million breakup fee from UPS, TNT faces an uncertain future on its own. The 42 percent drop in its share price wiped nearly €2 billion from its market value.

The European Commission, which would not comment, must publish its review of the deal by Feb. 5.

The Commission reviews major corporate mergers and acquisitions to ensure they do not hurt fair competition in the market. It has the power to block deals or to demand concessions, such as the sale of business parts, to safeguard market balance.

UPS had earmarked $5 billion in cash for the purchase of TNT. Sterne Agee analyst Jeffrey Kauffman said he expected the company to now use some of that for dividends or share buybacks. He said UPS could also pursue smaller acquisitions, especially in Asia.

Jim Corridore, equity analyst for S&P Capital IQ, said UPS can still “build a stronger network in Europe through smaller acquisitions and internal growth.”

Before UPS jumped in, some analysts thought rival FedEx Corp. might make an offer for TNT, but FedEx executives said in March they had no plans to do so.

U.S. analysts don’t expect FedEx to reconsider in the near-term because it’s in the midst of a major restructuring of its Express air cargo service.

FedEx declined to comment. Its shares rose 70 cents to $98.10.

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Bob Bummer
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January 28, 2013
I guess regulators decided that "Brown" could do nothing good for them.
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