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UPS Gets European Antitrust Objections Over TNT Review

Oct. 19 (Bloomberg) -- United Parcel Service Inc., the world’s biggest package-delivery company, said it will respond within a couple of weeks to antitrust objections from European Union regulators reviewing its purchase of TNT Express NV.

The so-called statement of objections sent today to UPS is a “normal step” and “does not prejudge the final outcome of the case,” the companies said today in a news release. Atlanta-based UPS and TNT Express reiterated their plan to complete the transaction in early 2013.

Such statements list regulators’ concerns about a deal, and the details are typically kept private. Spokesmen for UPS, Hoofddorp, Netherlands-based TNT and the European Commission declined to comment on the contents of the EU document.

“The market has come to an understanding that there were going to need to be adjustments to the deal,” said Ben Hartford, a Robert W. Baird & Co. analyst in Milwaukee. “There still is an expectation that a deal will get done. Obviously, the unknowable at the moment is, ‘To what level will UPS be able to acquire TNT?’”

UPS may need to offer concessions aimed at eliminating possible competition issues outlined in the document, two people familiar with the matter said last week. One TNT business that will need to be sold is the company’s airline, because EU rules prohibit foreign ownership of air carriers.

Donald Broughton, an analyst with Avondale Partners LLC in St. Louis, said he was disappointed that UPS and TNT didn’t reveal specifics about regulators’ objections.

No Detail

“Most were expecting there to be at least some detail as to what in particular the European Commission was taking issue with, which there’s not,” Broughton said. “There’s so much uncertainty here that any clearing up of the uncertainty would be good news.”

UPS slid 1.8 percent to $72.30 at the close in New York, joining a decline among major stock indexes. Broughton has a market underperform rating on the stock, while Hartford rates the shares as neutral. TNT Express dropped 2.2 percent to 7.88 euros in Amsterdam.

UPS agreed in March to buy TNT for 5.16 billion euros ($6.7 billion), or 9.5 euros a share in cash. The deal will double its size in Europe and vault it to equal footing there with Deutsche Post AG’s DHL, the market-share leader. The tie-up with money-losing TNT will immediately add to earnings on an adjusted basis once the purchase is done, UPS said at the time.

EU Competition Commissioner Joaquin Almunia said on Oct. 2 that the UPS deal may reduce from four to three the number of companies that control pan-European parcel-transport networks. Regulators would analyze whether the UPS-TNT Express combination would be “challenged enough” by DHL and FedEx Corp., he said.

UPS and TNT reiterated today that they “believe competition in Europe continues to be significant, coming from multiple players who offer similar services.”

To contact the reporters on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net; Aoife White in Brussels at awhite62@bloomberg.net; Victoria Stilwell in New York at vstilwell1@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net; Anthony Aarons at aaarons@bloomberg.net

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