UPS the delivery company ended its bid of $7 billion to acquire TNT Express after authorities from Europe said they would stop the acquisition on grounds it would hurt competition.
Officials from the European Commission told UPS (United Parcel Post) and TNT that they had planned to veto the deal since the commission felt the proposals made by the company to address concerns over competition were not adequate. UPS said it did not want to amend the terms, so it made an announcement on Monday that it was ending its acquisition.
Scott Davis the CEO at UPS said in a statement that the company was disappointed with the position of the EC, as the company proposed tangible and significant remedies that were designed to address any concerns with acquisition.
Last March the review began and UPS proposed its remedies during November and made two revisions to them, said a UPS spokesperson. The two companies had been prepared to sell some of their operations and provide their rivals with access to the network of the two.
UPS, based in Atlanta, said it would pay $2.6 million to TNT Express as an agreed upon termination fee as soon as the deal is formally blocked by the European Commission, which most expect to be early in February.
The deal with TNT would have been UPS’ biggest acquisition in its history. A merger of the two would have created a huge competitor for DHL the market leader in Europe, which is owned by Deutsche Post from Germany.
The collapse of the deal leaves TNT to scramble to find a strategy to stand alone in Europe where there is weak demand and without a CEO, as Marie Christine Lombard gave her resignation last September.
Shares of TNT dropped over 51% before recovering slightly on Monday afternoon.