So Long, and Don’t Forget the $272 Million

So long

Some partnerships last a lifetime. Others don’t even make it to the altar. For two shipping companies that sought to merge into one, the option was taken completely out of their hands by a third party.

On March 19, 2012, United Parcel Service entered into a Merger Protocol agreement with TNT Express, a major European shipping company based out of the Netherlands. In the all-cash offer, UPS agreed to buy all outstanding shares of the European company for 9.50 Euros per share. With 543.75 million shares in circulation, the deal amounted to an offer of approximately 5.16 billion Euros, or a little over $7 billion US dollars.

While the financially struggling TNT was eager to accept the deal, European regulators were quick to apply the brakes. After a careful review of the merger, the European Commission informed the two companies that it would not approve the merger. The Commission believed that the acquisition would stifle competition and cause higher shipping prices for customers. Without their authorization, UPS was forced to withdraw their offer on January 22, 2013.

While the news was disappointing to both companies, TNT will at least receive a parting gift from UPS. As part of the withdrawal agreement, UPS will pay TNT a termination fee of 200 million Euros, or $272 million US dollars. The cash infusion won’t be enough to shore up TNTs sinking finances, but it will offer temporary relief as it seeks alternatives to keep their business afloat.

Do you think the European Commission’s decision to deny the UPS/TNT merger deal was a good idea?

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3 Comments

  1. Anonymous

     /  March 4, 2013

    Nope – if the company is on the ropes and continues to struggle financially, the lack of competition from that carrier in the future would be the same as if the merger went through and could retain jobs tat might be lost.

  2. Anonymous

     /  March 5, 2013

    The USPS could use 272 million right now….

  3. Jonn

     /  March 5, 2013

    Maybe we can get UPS to bid for USPS and then have the FTC yank the deal at the last minute. An extra 272 mill would come in handy.

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