UPS could be ready to offer competitors access to its air and ground network to resolve theEuropean Commission’s objections to its planned €5.16 billion takeover of TNT Express, according to
media reports.The US company might also consider selling off some TNT Express assets to overcome the Europeancompetition regulator’s concerns, the Bloomberg and Dow Jones news agencies reported, citingpersons familiar with the plans. UPS and TNT are both not commenting on the ongoing talks.
The European Commission last month issued a confidential Statement of Objections to the UPS –TNT merger after conducting an extremely detailed in-depth investigation in recent months. EUCompetition Commissioner Joaquín Almunia said at the start of November that the case raised “serious competition concerns” and “substantial remedies” were needed, although the authority hasnot made its specific concerns public.
Bloomberg reported yesterday that UPS is considering guarantees allowing others to send items atfixed prices using its network of trucks, planes and warehouses in order to maintain a sufficientnumber of European competitors in overnight express shipments. It described this issue as the mainconcern of EU regulators.
According to the news agency, UPS has been in talks with La Poste’s DPD parcel unit as apotential buyer of assets and network access customer, and has also held informal talks with RoyalMail subsidiary GLS and with FedEx, although the latter is apparently trying to block the TNTdeal.
Similarly, Dow Jones reported that UPS would open its enlarged European air and truck network torival express delivery firms and would sell assets to secure EC approval for the deal. It alsocited some UPS institutional investors as saying that UPS could “walk away” from the deal if thenecessary concessions were seen as excessive.
One important obstacle to the merger has now been removed. On November 16, TNT Express announcedthe sale of its airlines, TNT Airways and PanAir to Irish-based ASL Aviation Group, conditional onthe merger with UPS. Under EU law, an airline operating intra-EU routes must be more than 50% ownedand controlled by an EU state or company.
The European Commission has officially extended its investigation into the UPS – TNT mergeruntil January 15, 2013.
