UPS and TNT Express said this afternoon that the European Commission is going to need more time to review their merger deal.
The two companies had previously suggested that with approval under European antitrust rules, the acquisition of TNT Express by UPS would be concluded by the third quarter of the fiscal year, setting a 31 August deadline for its EUR 5.16bn ($6.28bn USD) offer.
Today the companies said they were now expecting the deal to be completed in the fourth quarter of 2012 as the Commission is now expected to move to a Phase II review as “there are certain areas that require more time to analyse”.
UPS and TNT said a Phase II review could take up to 25 weeks to complete.
Atlanta-based UPS said it expected now to extend its offer deadline, but did not state when the new deadline might be set.
The current EUR 9.50 per share offer from UPS allowed an extension of the deadline of between two and 10 weeks.
In a joint statement, the two companies said: “UPS and TNT Express welcome the opportunity to further engage with the Commission’s competition services. UPS and TNT Express remain convinced the merger will benefit customers and other stakeholders and look forward to successful completion of the regulatory process.”
The scrutiny of the European Commission’s antitrust officials comes since the acquisition will reduce the big four players in the European express delivery industry to just three.
Based on 2009 figures, a combination of UPS and TNT would boast a market share of around 39%, compared to DHL’s 37% share and the 10% of the market taken by FedEx. The merger would also lead the business-to-business delivery market within Europe, taking around a 27% share of the market compared to DHL’s 15% and DPD-La Poste’s 7%.
TNT Express had revenues of EUR 7.25bn in 2011, delivering almost one million items each day on average through road and air transportation networks in Europe, the Middle East, Africa, the Asia-Pacific and the Americas.
Together with UPS, a merged organisation would have annual revenues of more than EUR 45bn ($60bn USD). UPS has said it is planning a four-year integration process to ensure there is no threat to customer service while the two networks are joined.
Source: Post&Parcel/UPS/TNT Express