United Parcel Service (NYSE:UPS) announced today that after 10 months of regulatory review, the European Commission is going to reject its proposal to acquire Netherlands-based TNT Express. When this happens, UPS will withdraw its offer, the company said. The deal was valued at $7 billion.
UPS first submitted an acquisition proposal to the European Commission in March 2012. It submitted an "initial remedies proposal" and two revisions over the past two months to address concerns. However, the Commission recently informed the two companies that it is working on a decision to prohibit UPS' acquisition, effectively canceling any hopes of a buyout, UPS announced.
In a statement released today, UPS Chairman and CEO Scott Davis was quoted as saying, "We are extremely disappointed with the European Commission's position. We proposed significant and tangible remedies designed to address the Commission's concerns with the transaction. The combined company would have been transformative for the logistics industry, bringing meaningful benefits to consumers and customers around the world, while supporting growth in Europe in particular."
TNT's customer base is mainly comprised of electronic, automotive, industrial, and health care multinational companies. It currently owns operations in 62 countries and delivers to more than 200 with its 52-aircraft fleet.
UPS will pay TNT a $267 million termination fee, and says it will continue to focus elsewhere on its growth strategy.
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