UPS ‘Absolutely Committed’ to TNT Deal, Due to Meet With EU
United Parcel Service Inc. (UPS), the world’s biggest package-delivery company, is “absolutely committed” to its plan to take over TNT Express NV (TNTE) amid concerns from European Union antitrust regulators, said Dan Brutto, president of international operations.
UPS representatives will meet EU officials this week to discuss the transaction, Brutto said to reporters in Brussels today. It “would not be unexpected to receive a statement of objections soon,” UPS said in an e-mail response to questions from Bloomberg News.
UPS may be sent the document listing EU concerns over the deal as soon as this week, two people said on Oct. 10. Atlanta- based UPS is likely to wait until it receives the statement before offering concessions aimed at eliminating possible competition problems, the people said.
“UPS is absolutely committed to the transaction and the value it will bring to customers and the competitiveness of Europe,” Brutto said today. “Pricing is very competitive and consumers are very price sensitive,” he said in relation to competition concerns over the deal.
UPS agreed in March to buy TNT for 5.16 billion euros ($6.7 billion) or 9.5 euros a share in cash. The transaction will double its size in Europe and vault it to equal footing with Deutsche Post’s DHL, the market-share leader. The combination with money-losing TNT will immediately add to earnings on an adjusted basis once the deal is done, UPS said at the time.
Antoine Colombani, a spokesman for the European Commission, declined to comment on any meeting or on a statement of objections.
UPS estimates its takeover of TNT would generate savings of between 400 million and 550 million euros annually over the next few years, Brutto said. Europe is “the right place to be” for the logistics company in the medium to long-term, he said.
EU Competition Commissioner Joaquin Almunia said on Oct. 2 that the UPS deal may cut to three the number of companies that control pan-European parcel-transport networks. Regulators would analyze whether the combined firm would be “challenged enough” by DHL and FedEx Corp. (FDX), he said.
“These companies offer a service that has a broad impact on our economy, especially for cross-border trade, so it is important that customers continue to have access to these services at competitive conditions,” Almunia said in the speech in Nicosia.
The EU in July cited potential competition concerns for small-parcel delivery services, in particular international express services, in several European countries where the companies would have very high combined market shares.
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