As expected, the European Commission on Wednesday blocked UPS’ $6.77 billion bid to buy a Dutch delivery company, saying the deal would diminish competition in Europe.
The commission said it prohibited the acquisition because eliminating TNT Express from the market would reduce the number of small-package delivery choices to only two or three in 15 countries, likely causing prices to rise. UPS had anticipated the ruling and two weeks ago said it was dropping the bid.
At the time, UPS chairman and CEO Scott Davis said the Sandy Springs company is “extremely disappointed” with the European Commission’s position. UPS will pay a $267.4 million termination fee to TNT.
If it had gone through, the acquisition would have been UPS’ largest ever and would have significantly boosted its strength in Europe. UPS already has a large presence on the continent, but the addition of TNT would have doubled its size and eliminated a competitor.
UPS offered to sell TNT subsidiaries in the 15 nations where competition was a concern, as well as in two others, and to give the purchaser access to its air network for five years.
“What they offered was simply not enough to address the serious competition problems we identified,” Joaquín Almunia, Commission Vice President in charge of competition policy, said in a statement.
UPS said in a statement Wednesday that it believed the acquisition would have benefited customers worldwide.
Experts said the original acquisition would have made sense for UPS, but that the benefits waned as the deal was drawn out and more concessions were required. The company will still be able to make small acquisitions or expand in Europe on its own, but growth will be slower.
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