United Parcel Service, yesterday announced the withdrawal of its offer for its proposed $6.85-billion acquisition of Dutch rival TNT Express, as it failed to secure EU regulatory approval for a merger.

The European Commission (EC) had in July started a Phase II investigation into the deal on concerns that the merged company would corner a large market share in Europe.

In mid-January, Atlanta-based UPS said that the European Commission (EC) had informed it and TNT Express that it is working on a decision to block the proposed acquisition. (See: EC to block TNT's $6.85-bn acquisition by UPS).

The European Commission has now issued a formal decision prohibiting the proposed acquisition of TNT Express.

"As a result of the prohibition by the EC, the offer condition relating to EU Competition Clearance will not be fulfilled and the acquisition of TNT Express by UPS will not be completed," UPS said in a statement.

"Given this outcome, UPS and TNT Express entered a separate agreement to terminate the merger protocol," it aaded.

UPS said it had proposed significant and tangible remedies designed to address the EC's concerns to ensure a competitive landscape in Europe.

"UPS believes that the combined company would have been transformative for the logistics industry, bringing meaningful benefits to consumers and customers around the world, while supporting much needed growth in Europe in particular.

While UPS is disappointed in the EC's decision, the company's focus is on the continued execution of its growth strategy.

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

Moreover, it would have increased UPS's international sales to around 36 per cent from 26 per cent to over $60 billion (€45 billion).

Deutsche Post had opposed the deal saying that the merger would create a powerhouse in Europe's small package delivery sector's limited market, mainly in the UK.

In December, UPS offered concessions to the EC by agreeing to divest certain business units and grant access to some of its airline network to rivals.

TNT had agreed to sell TNT Airways and Pan Air Lineas to ASL Aviation Group on condition that the sale will become effective immediately prior to completion of its proposed merger with UPS (See: TNT Express to sell airline operations if EU approves UPS merger.

Under the EU rules, a non-European company cannot own a majority stake in an European carrier.