TNT NV 'deal' could trigger antitrust review for UPS

United Parcel Service Inc. (UPS) would likely face antitrust scrutiny on both sides of the Atlantic if its reported interest in Dutch rival TNT NV turns into a fully-fledged deal.

TNT shares rose on weekend media reports of renewed interest from UPS which, like smaller U.S. rival FedEx Corp., has courted the logistics and mail specialist several times in recent years.

Both U.S. companies prize TNT’s express delivery business in Europe and expanding Asian presence to counter a slowdown in their domestic activities.

Adding the 8 pct share of the European Union express delivery market held by UPS to the sector-leading 17 pct held by TNT would reach a level that normally triggers interest from competition officials at the European Commission. FedEx has a market share of just 2 pct in the EU.

Interest from the U.S. rivals has in the past faltered on valuation and the future of TNT’s domestic-focused mail division, which accounted for EUR4.3 billion of its EUR11.5 billion group sales last year.

Scott Davis, UPS chief executive, last month declined comment on any specific interest in TNT, though his remarks on its acquisition priorities indicate the Dutch group remains a potential fit.

TNT Chief Executive Peter Bakker said last month that the company could continue its independent strategy, but UPS was linked with the Dutch group again at the weekend. A report in the London-based Sunday Telegraph that said both sides had hired advisers.
Its shares later declined Monday after a UPS executive told Reuters any deal would hit the U.S. group’s valuation. However, the company said the executive was “misquoted”, and called for a correction.

UPS and TNT both declined official comment on the speculation.

United Parcel Service Inc. (UPS) would likely face antitrust scrutiny on both sides of the Atlantic if its reported interest in Dutch rival TNT NV turns into a fully-fledged deal.

TNT shares rose on weekend media reports of renewed interest from UPS which, like smaller U.S. rival FedEx Corp., has courted the logistics and mail specialist several times in recent years.

Both U.S. companies prize TNT’s express delivery business in Europe and expanding Asian presence to counter a slowdown in their domestic activities.

Adding the 8 pct share of the European Union express delivery market held by UPS to the sector-leading 17 pct held by TNT would reach a level that normally triggers interest from competition officials at the European Commission. FedEx has a market share of just 2% in the EU.

Interest from the U.S. rivals has in the past faltered on valuation and the future of TNT’s domestic-focused mail division, which accounted for EUR4.3 billion of its EUR11.5 billion group sales last year.

Scott Davis, UPS chief executive, last month declined comment on any specific interest in TNT, though his remarks on its acquisition priorities indicate the Dutch group remains a potential fit.

“The one area that we’d be most interested in still is international package, areas that make sense, and that’s been the case for the last several years,” Davis said on an earnings call. “Certainly, Asia and Europe are areas that we’re interested in, particularly Central and Eastern Europe.”

FedEx fueled the latest round of speculation last month, with reports of preliminary talks pushing TNT shares up 30 pct, gains that were halved when discussions were said to have ended.

TNT Chief Executive Peter Bakker said last month that the company could continue its independent strategy, but UPS was linked with the Dutch group again at the weekend. A report in the London-based Sunday Telegraph that said both sides had hired advisers.
Its shares later declined Monday after a UPS executive told Reuters any deal would hit the U.S. group’s valuation. However, the company said the executive was “misquoted”, and called for a correction.

UPS and TNT both declined official comment on the speculation.

Separately, UPS faces intensifying scrutiny in the U.S. from the proposed deal to pickup and deliver packages in the U.S. for Germany’s Deutsche Post.

Two U.S. senators last week asked federal regulators Monday to take a close look at a 10-year agreement between UPS and the German company’s DHL Express unit, slated to close at the end of the year.

UPS said it was confident that the proposed deal met all competition criteria, but would cooperate with any federal of Congressional actions.