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UPS to drop its bid to acquire TNT Express due to expected EC disapproval

United Parcel Service Inc (UPS) (UPS Airlines) (Atlanta and Louisville) will drop its bid to acquire TNT Express N.V. (Hoofddorp) because it now expects the European Commission (EC) to deny the acquisition.

On March 19, 2012, UPS announced its intention to acquire TNT Express for $6.7 billion. On September 5, 2012, UPS announced it expected to close the deal in early 2013 subject to EC approval.

UPS will pay TNT a termination fee in the amount of EUR 200 million.

TNT Airways (Liege) is a subsidiary of TNT Express. TNT is now expected to remain independent.

UPS issued the following statement:

United Parcel Service, Inc. announced today (January 14) the European Commission (EC) has informed UPS and TNT Express that it is working on a decision to prohibit the proposed acquisition of TNT Express.

UPS submitted an initial remedies proposal on November 29, 2012 and subsequently revised the proposal twice. UPS began the competitive review process with the EC in March 2012.

Scott Davis, UPS Chairman and CEO said, “We are extremely disappointed with the EC’s position. We proposed significant and tangible remedies designed to address the EC’s concerns with the transaction. 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.”

Upon prohibition by the EC, the Offer Condition relating to EU Competition Clearance will not be fulfilled and UPS will pay TNT a termination fee in the amount of EUR 200 million and will withdraw the Offer.

Further announcements will be made once the European Commission has issued its formal decision. The decision is expected to be adopted formally in the coming weeks.

Top Copyright Photo: Michael B. Ing. Boeing 747-44AF N572UP (msn 35669) climbs away from Anchorage International Airport (ANC).

UPS: AG Slide Show

TNT: AG Slide Show

Bottom Copyright Photo: Rainer Bexten. Southern Air’s Boeing 777-FHT N778SA (msn 39286) arrives at the Liege, Belgium sorting facility.

UPS and TNT Express send their merger “remedies” paperwork to the European Commission

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United Parcel Service, Inc. (Atlanta and Louisville) and TNT Express N.V. (Hoofddorp) (TNT Airways) have announced, in line with Dutch disclosure requirements, that remedies have been submitted to obtain competition clearance from the European Commission (EC) for the acquisition of TNT Express by UPS. The offer of remedies does not change the terms and conditions of the Offer by UPS for TNT Express.

The proposed remedies aim to address the EC’s concerns regarding the competitive effects of the intended merger on the international express small package market in Europe. UPS and TNT Express continue to be fully committed to the merger and are working closely with the EC in order to gain competition clearance allowing completion of the transaction in early 2013. As part of the approval process, the EC will market-test the remedies on a confidential basis.

The proposed remedies comprise the sale of business activities and assets in combination with granting access to air capabilities. Eligible buyers of these activities will have to ensure the long-term viability of the divested activities and continuity of customer service.

No further details of the confidential discussions or proposed remedies will be revealed at this stage. The discussions are ongoing, which means that the offered remedies may be subject to change.

UPS and TNT Express believe their merger will help create a more efficient logistics market, thereby improving the competitiveness of Europe and the solutions offered to businesses and consumers. Customers and consumers will benefit from a broader portfolio of services and better global access, along with lower supply-chain costs overall and improved service levels in terms of timing and reliability.

UPS and TNT Express value their employees highly. Both UPS and TNT Express will follow the required consultation and advice procedures with their works councils with regard to these remedies.

In accordance with EU Merger Regulation, the timing of the remedies submission extends the EC’s review period by 15 business days to February 5, 2013.

Copyright Photo: Michael B. Ing. UPS’ Boeing 747-44AF N571UP (msn 35668) climbs away from Anchorage International Airport.

UPS-United Parcel Service: AG Slide Show

TNT Airways: AG Slide Show