UPS’ €5.16 billion takeover of TNT Express is now not expected to be completed until “early2013″ after the European Commission yesterday extended its in-depth investigation into the deal
into January 2013.The Commission extended the deadline for its ‘Phase 2’ investigation by a further 10 workingdays from December 20, 2012, until January 15, 2013, in order to have more time to reviewadditional information. This was the latest in a series of extensions to the deadline.
UPS and TNT Express confirmed they mutually consented to a request from the European Commissionto extend the review period for another 10 working days to enable the Commission to fully reviewadditional information related to the transaction.
“As a result of this extension, UPS and TNT Express now anticipate completion of the Offer andclose of the transaction in early 2013,” the two companies stated. When the deal was firstannounced in March, the companies said they expected the European Commission to approve the dealafter a four-week ‘Phase 1’ review, enabling completion in Q3, 2012.
The US and Dutch companies also announced that UPS has formally extended its €9.50 per shareoffer for TNT shares by ten weeks from August 31 to November 9. The offer period had been extendedbecause not all conditions for completion of the offer, in particular the condition on competitionclearance, were fulfilled upon the expiry of the initial offer period on 31 August 2012.
However, the offer period will inevitably have to be extended again beyond the November 9 datesince competition clearance will not be granted by then either. A further 10-week extension of theoffer period would see it running until Friday, January 18, 2013, which is three days after the newCommission investigation deadline.
“If and when the currently extended Offer Period lapses without the condition on competitionclearance having been fulfilled, an exemption will be requested from the Netherlands Authority forthe Financial Markets (AFM) to extend the Offer Period again,” the two companies noted.
UPS and TNT Express stressed that they “remain committed to the offer and are working closely tofulfill all offer conditions”. It is already clear that ownership of Liege-based TNT Airways willhave to be transferred to an EU-based company since US-based UPS is not legally entitled to own aEuropean airline.
However, the European Commission has said it is also concerned about the potential competitiveimpact of the merger on the international express delivery market, which is dominated by the fourintegrators, DHL Express, UPS, FedEx and TNT.
Analysts and commentators have speculated that UPS and TNT might be required to dispose ofbusiness activities in some markets where they have a large combined market share.
Under the terms of the €5.16 billion ($6.51 billion) offer, UPS would acquire TNT Express “tocreate a service leader in the logistics industry and an enhanced, integrated global network. Thecomplementary strengths of both organisations will create a customer-focused global platform thatwill be a leader in transportation technology and customer service”, the two firms commented.
“The combined network will help facilitate the flow of trade, making customers more competitivenot just in U.S. and European markets, but also in markets across Asia and Latin America, helpingto stimulate much needed economic growth,” they added.
