TNT-UPS merger collapses in boost for Royal Mail
Monday 14 January 2013
Royal Mail received a much-needed boost today as United Parcel Services, the world’s largest deliverer of packages, dropped a €5.2 billion (£4.3 billion) takeover bid for Dutch rival TNT Express after it became clear that it would be blocked by European regulators.
The pull-out saw TNT’s shares halve in value, with industry experts questioning the company’s future despite the fact that it is the market leader in Europe.
A combined UPS and TNT would have held 35% of the UK parcels market and would have been a formidable competitor to Royal Mail. It is believed that UPS suggested selling parts of the merged business to Royal Mail in a bid to get round European Commission competition worries.
Ahead of Royal Mail’s planned privatisation, chief executive Moya Greene has been pushing its parcels arm and express delivery — where a united TNT-UPS would have offered stronger competition — to promote its commercial future.
UPS had wanted to buy TNT to help it expand in the faster-growing Asian and Latin American markets using the Dutch firm’s networks. But TNT has been struggling for several years in its markets closer to home.
TNT Express shares, which were briefly suspended when the market opened, fell as much as 50% to €4.05, compared with the UPS offer price of €9.50 per share.
UPS will pay TNT a fee of €200 million for breaking the takeover deal. But that will be little compensation for the business which made losses of €3 million in the third quarter of 2012 on revenues of €1.8 billion.
Chief executive Marianne-Christine Lombard quit TNT in September part-way through the bid, and came under heavy criticism for bailing out when the deal looked to be in trouble. She had stood to make a €2.6 million bonus if the takeover had gone through.
UPS had made a number of offers to the European Commission, including selling off parts of the small packets business and opening up the two carriers’ airline networks to rivals. But a meeting with the commission at the end of last week made it clear the deal would be blocked.
“We proposed significant and tangible remedies designed to address the EC’s concerns with the transaction,” Scott Davis, UPS chairman and chief executive, said in a statement, expressing disappointment at the decision after months of talks.
“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.”
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