Deal pulled, sending TNT shares down 40%, after European competition authorities said they would probably block the deal
Shares in TNT Express slumped by more than 40% on Monday as
rival United Parcel Service dropped its $6.8bn (£4.2bn) bid for the
company after the European competition authorities said they would
probably block the deal.
The share price fall cost investors around €1.6bn (£1.3bn), despite UPS paying TNT a €200m break fee following its withdrawal. The shares closed on Monday at €4.81 after slumping from €8.24.
The US delivery giant said it was unrealistic to hope that the European commission would give clearance, after the authorities said on Friday they were likely to prohibit the deal.
UPS agreed to buy TNT last March, marking the first major bet by a US company on Europe since the region's debt crisis intensified last year. The move was designed to put UPS ahead of competitors such as FedEx, as it would strengthen its position in Europe and globally.
However, European competition authorities soon said they would investigate the deal, which they feared would cut the number of competitors from four to three and lead to a highly concentrated market for domestic and international express delivery services on the European continent.
UPS revised the deal twice but it appears the amendments were not enough to satisfy the commission. Scott Davis, UPS chairman and chief executive, said: "We are extremely disappointed with the commission's position. We proposed significant and tangible remedies designed to address the commission's concerns with the transaction."
TNT Express shares, which were briefly suspended when the market opened on Monday, initially fell by as much as 50% to €4, compared with the UPS offer price of €9.50 a share. The market had been concerned for months that the deal might be blocked.
The share price fall cost investors around €1.6bn (£1.3bn), despite UPS paying TNT a €200m break fee following its withdrawal. The shares closed on Monday at €4.81 after slumping from €8.24.
The US delivery giant said it was unrealistic to hope that the European commission would give clearance, after the authorities said on Friday they were likely to prohibit the deal.UPS agreed to buy TNT last March, marking the first major bet by a US company on Europe since the region's debt crisis intensified last year. The move was designed to put UPS ahead of competitors such as FedEx, as it would strengthen its position in Europe and globally.
However, European competition authorities soon said they would investigate the deal, which they feared would cut the number of competitors from four to three and lead to a highly concentrated market for domestic and international express delivery services on the European continent.
UPS revised the deal twice but it appears the amendments were not enough to satisfy the commission. Scott Davis, UPS chairman and chief executive, said: "We are extremely disappointed with the commission's position. We proposed significant and tangible remedies designed to address the commission's concerns with the transaction."
TNT Express shares, which were briefly suspended when the market opened on Monday, initially fell by as much as 50% to €4, compared with the UPS offer price of €9.50 a share. The market had been concerned for months that the deal might be blocked.
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