European regulator widens probe into $6.4-bn UPS-TNT deal

The European antitrust regulator has broadened its investigation into United Parcel Service's (UPS) €5.2-billion ($6.4 billion) proposed takeover of its Dutch rival TNT Express, on concerns that the merged company would corner a large market share in Europe.

After the European Commission (EC) launched a preliminary review last month, UPS yesterday said it expects the regulator to start a Phase II investigation into the deal.

The Atlanta-based company said that it does expect the deal to be completed by the end of the initial offer period, and will extend the offer period beyond 31 August 2012.

In March, UPS, the world's largest package delivery and logistics company offered to buy TNT Express, after raising its bid for €10 per share or $6.4 billion, raising it to $6.85 billion (See: UPS to acquire European rival TNT Express for $6.85 billion).

The potential acquisition would be UPS's largest in its 105-year history after it purchased Overnite Corp in 2005 for $1.2 billion.

Buying the Hoofddorp, Netherlands-based company, will give UPS a stronghold in Europe, China, Russia, Brazil and India, most of which have high growth potential. It would put UPS on par with Europe's market leader DHL- a unit of Germany's Deutsche Post AG.

TNT Express holds an 18-per cent market share in Europe, while UPS holds 10 per cent, bring the combined stake to 28 per cent - more than DHL's 15-per cent.

Deutsche Post has already said that the deal would create a powerhouse in Europe's small package delivery sector's limited market, mainly in the UK.

"The small package delivery sector is of strategic importance for various other industries in Europe," said Joaquín Almunia, the EC's vice president in charge of competition policy.