The TNT Express share price plummeted by over 43 per cent today as investors questioned thecompany’s future following the failure of UPS’ €5.16 billion takeover deal.
TNT shares were at €4.68, down 43.21 per cent, in late afternoon trading after closing onFriday at €8.25, which was below the UPS offer price of €9.50. The slump wiped more than €2 billionoff the company’s market capitalisation, which was left at €2.54 billion compared to the €5.16billion that UPS would have paid.
In contrast, UPS shares rose slightly in early trading on the New York Stock Exchange.
UPS and TNT announced separately this morning that they expected the European Commission toveto their agreed merger based on their proposal for remedies to overcome competition concerns,thus effectively abandoning the mega-deal. They said they would comment further once the Commissionhad made its formal decision, which is expected by February 5 at the latest.
Experts had expected a deal to be agreed with La Poste-owned DPD for the disposal of TNTbusinesses in many European countries, which would have created a new express competitor. TheEuropean Commission, which had been seeking to “replace” TNT with a competitor able to put on “thesame kind of competitive pressure in this market”, would then have cleared the overall transaction.
The acquisition of TNT, first announced in March 2012, would have made UPS about the samesize as DHL Express in Europe, and far ahead of FedEx Express, which is seen as a distant fourth inthe region.
UPS CEO Scott Davis said he was “extremely disappointed” with the EC’s position andcommented: “Looking ahead, our company focus will be on the continued execution of our growthstrategy. While we viewed the acquisition as a compelling growth platform, our financialstrength allows UPS to capture future opportunities.”
TNT said it would provide a strategy update “in due course” and management would focus on “reassuring customers… ensuring the engagement and commitment of employees, and strengthening itsstrategy, including further steps to improve profitability”.
A spokesman for market leader DHL Express told CEP-Research that the company would not bemaking any comment. “DHL is focusing on organically growing its business and delivering the bestservice for its customers,” he said.
A spokesperson for FedEx Express said: “As a matter of company policy, we do not comment oncorporate development matters nor those of our competitors.” FedEx reportedly rejected an informalapproach from UPS in December to buy some TNT businesses.
