UPS Challenges EU Verdict on TNT - Analyst Blog
08 April 2013 - 8:50PM
Zacks
United Parcel Service, Inc. (UPS) and TNT
Express have once hit the headlines for their attempt to win back
the lost ground on proposed acquisition plans. Going by market
reports, UPS has appealed against the European Union (EU)
regulator's decision of forbidding the acquisition of Dutch
shipping company TNT Express.
Previously, UPS had stated that it had dropped its acquisition
plans. However, the company aims to challenge the regulatory ruling
for clarifications on the European Commission’s assessment on the
competitive landscape in Europe that forced regulators to discard
the UPS–TNT deal from materializing. Earlier this year, regulatory
authorities in the Competition Commission rejected the deal citing
that it would increase express freight rates in 29 countries.
The commission feared that if the deal materializes, UPS is will
emerge as the biggest player in the delivery business in the
European continent, leaving only two other big peers – DHL Express
and FedEx Corporation (FDX). Further, the deal
would consolidate UPS’ position as a global leader in the
international market with annual revenues of more than €45 billion
($60 billion).
In respect to these issues, UPS planned to sell TNT Express’
assets to the European Union to meet the antitrust requirements for
the completion of the impending acquisition of the later. The two
companies reportedly decided upon selling their business units to
13 countries of the European Union and provide access to UPS’
networks to secure the $6.8 billion acquisition deal.
According to reports, UPS was making efforts through informal
channels to persuade FedEx to buy certain assets of TNT to secure
the deal. However, FedEx turned down the deal showing no
inclination towards acquiring TNT’s assets.
We believe UPS’ decision to seek assessment over the rejection
of the TNT acquisition may revive the company’s effort to expand
through acquisitions. A proper insight on the regulatory and
competitive environment in Europe amid economic uncertainties would
help curb contingencies for UPS while pursuing acquisition and
merger policies in this continent.
UPS operating with other industry players like
Expeditors International of Washington Inc. (EXPD)
retains a Zacks Rank #3, implying a Hold rating.
Air Transport Services Group, Inc. (ATSG) with
a Zacks Ranks #2 (Buy) is another stock in this sector we see as
worth considering.
AIR TRANSPT SVC (ATSG): Free Stock Analysis Report
EXPEDITORS INTL (EXPD): Free Stock Analysis Report
FEDEX CORP (FDX): Free Stock Analysis Report
UTD PARCEL SRVC (UPS): Free Stock Analysis Report
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