United Parcel Service Inc. (UPS) proposed concessions in 13 of the European Union’s 27 countries as it tries to push through its 5.16 billion-euro ($6.75 billion) bid for TNT Express NV (TNTE), two people familiar with the matter said.
UPS is offering to predominantly sell TNT businesses in smaller European markets, said the people, who asked not to be identified because the negotiations are private.
UPS, which is based in Atlanta, submitted an offer to regulators last week that included the sale of some business units and granting access to its air network. UPS has twice pushed back the target date to complete the biggest acquisition in its 105-year history, which will double its size in Europe, as the merger review continues. European regulators’ official deadline for a ruling is now Feb. 5.
UPS’s rivals and customers are being asked to comment on the company’s proposal and their feedback will be used by the EU to determine whether the offer is sufficient to resolve competition problems. Regulators sent formal objections to UPS in October, saying the acquisition would remove one of its few serious rivals in the European delivery-services market, according to a person familiar with the regulators’ complaint.
“We have carried out a market test of the remedies proposal,” EU Competition Commissioner Joaquin Almunia told reporters in Brussels today. He said he’d come back to the two companies “informing them of some of our concerns given the results.” The market test process hasn’t yet been completed, Almunia’s spokesman Antoine Colombani said in an e-mail.
TNT closed at 7.64 euros in Amsterdam trading today, valuing the Dutch company at 4.15 billion euros. The stock is trading 24 percent below the offer price of 9.50 euros per share.
While they don’t exclude UPS units, the concessions submitted largely affect smaller TNT subsidiaries, assets, customer contracts and personnel, one of the people said. That would allow UPS to retain the most important synergies in the biggest markets, another person said.
“We said on Friday we won’t get into details, and we’re not going to,” Peggy Gardner, a spokeswoman for UPS, said today regarding the proposed remedy package. Hoofddorp, Netherlands- based TNT spokesman Ernst Moeksis could not immediately be reached for comment.
Should the European Commission rule in favor of the remedies, UPS would then have about six months to complete the asset sales, one of the people said.
UPS’s bid for TNT required “substantial remedies” to eliminate EU antitrust concerns, Almunia said in a Nov. 2 speech. Regulators still have time before they need to prepare a decision on the UPS-TNT deal, he said today.
“After Christmas we will need to have a draft decision and for this time we will need to make up our final opinion regarding the capacity of the remedies finally proposed by UPS and TNT,” he said.
EU regulators prefer merger remedies that are “simple, workable and easy to implement,” Alexander Italianer, the antitrust agency’s most senior official, said at a Brussels conference today.
An offer to access critical technology or infrastructure needs to be straightforward and must be monitored effectively to be successful, he said. He didn’t refer to the UPS-TNT transaction.