ATLANTA-based UPS is facing an
uphill struggle to win EU approval over its acquisition of Europe's second
largest parcel delivery company by its February 28 deadline following
objections from the European anti-competition body, says American Shipper.
The drawn-out process has seen TNT's
share prices fall from EUR9.50 to EUR7.22 revealing the doubt that surrounds
the sale.
The deal is not "strategically
vital" for a company with strong cash flows and a strong foothold in
Europe, said US-based analysts Stifel Nicolaus on the UPS-TNT deal. They
forecast a one-third chance of the deal being finalised.
"The China and Brazil
operations they would acquire with TNT are rather insignificant, are losing
money, and could be achieved independently by UPS (for less money), in our
opinion," they said in a note.
The US$5.16 billion offer will cost
the company $225 million in a termination fee if the deal falls behind the
deadline or parties fail to agree on concessions set out by the European
Commission.
These "substantial"
concessions are to prevent price collusion or anti-competitive problems, said
the European Commissioner for Competition policy Joaquin Alumnia.
Concessions may include handing over
some of its parcel operations in Europe or through direct sharing of its
network to competitors, in order to meet the EC half way.
Source : HKSG.
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