The world's biggest package-delivery company, United Parcel Service Inc. (UPS), is reviewing its $6.7 billion purchase of TNT Express NV to ensure compliance with the anti-trust regulations in European Union. UPS would have doubled its size in Europe with the buyout.
Now, to meet the regulatory demands in the region, the company plans to hive off some business units and assets as well as give competitors access to its air networks, delivery trucks and warehouses and allow them to ship goods at fixed prices. The overriding goal is to create a new, sizable European competitor to maintain a sufficient number of companies in overnight express shipments.
The company has stated publicly that eligible buyers of these units and units would have to ensure the long-term viability of the divested activities and continuity of customer service.
Currently, TNT and Deutsche Post AG (DPW)'s DHL are UPS's main competitors for next-day express deliveries within Europe. European Commission, the regulatory arm of EU, launched an investigation into the issues pertaining to the takeover. The investigation is expected to be completed by Feb. 5. The Commission reportedly aims to underscore the competitive effects of the intended merger on the international express small package market in Europe.
UPS has twice pushed back the target date to complete the acquisition owing to the regulatory concerns highlighted. It had announced the purchase on March 19. In any case, the terms and conditions of the offer by UPS for TNT Express will remain unchanged.
UPS and TNT Express have reaffirmed their commitment to the merger plan and are working closely with the European Commission to gain competition clearance allowing completion of the transaction in early 2013.
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