EU Commission stops clock on UPS-TNT merger investigation

The European Commission has confirmed it has suspended its Phase 2 investigation into the proposed acquisition of TNT Express by its US rival UPS. Officials said more time is needed to get hold of certain information about the EUR 5bn proposed merger between the two companies.

The investigation had previously been expected to take until 12th December, that deadline having already been extended from an original 28th November deadline.

UPS said today that the current “pause” was merely a normal part of the EU Commission information gathering process, and that it was still expecting approval for the deal to come in the fourth quarter of this year.

It is understood that these kind of delays can happen in the EU competition review process, and that this particular pause may not be the only one in the UPS-TNT review.

The Commission has been investigating the proposed EUR 9.50 per share offer from UPS for TNT Express since May, deciding in July that its concerns about the combined company’s potential market share in express deliveries within certain EU countries warranted an extended “Phase 2” review, which was expected to take 25 weeks to complete.

Last week TNT Express held a shareholders’ meeting where executives said they were “absolutely confident” that the deal would be approved by the EU antitrust regulators.

Today the Commission confirmed it has halted the Phase 2 proceedings while it waits for additional information from the parties involved.

Maria Madrid, a spokesperson for the Commission told Post&Parcel: “The Commission stopped the clock according to Article 11(3) of the Merger Regulation. As soon as the Commission receives the necessary information, the clock will be reset again. The deadline will be shifted accordingly.”

The Commission could provide no indication of how long the suspension might last, nor detail what information is required for the investigation to proceed.

“Temporary delay”

UPS, which is expected to come forward with a revised deadline for its offer, since its current offer is due to run out at the end of August, said today that it has been notified of the “temporary delay” by the Commission, and that such a delay was “not uncommon” in the Phase 2 review process.

Spokesperson Peggy Gardner said the Phase 2 process involved a number of information requests from the EU Commission for parties involved.

“As of right now, we still anticipate an approval in the fourth quarter of the year,” she said.

The combination of UPS and TNT Express is expected to establish one of the world’s biggest logistics companies, with annual revenues of around EUR 45bn.

The move would see the proportion of UPS business taking place outside the United States increasing from the current 26% to 36%, with TNT Express bringing particular strength in Europe and Asia.

The companies expect a “careful” integration process to take four years to complete, so that customer service levels are not affected as the two networks are brought together, with around EUR 500m in synergy savings expected as the TNT brand is phased out.

Last month TNT Express CFO Bernard Bot said one of the requirements of the UPS merger likely to take place to gain favour from competition authorities was that TNT Airways will be sold. The company is already in the process of looking for a buyer, with Bot saying the process was “well in hand”.

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