AMSTERDAM – United Parcel Service Inc (UPS) said it will withdraw its 5.2 billion euro ($7 billion) bid for TNT Express because it expects the European Commission (EC) to block the deal.
UPS, the world's No. 1 package delivery company, was seeking to buy Dutch peer and European market leader TNT Express to gain access to its network in the fast-growing Asian and Latin American markets.
The EC has informed UPS and TNT Express that it is working on a decision to prohibit the proposed acquisition, the two companies said in separate statements.
"UPS will pay TNT a termination fee in the amount of 200 million euros and will withdraw the offer," once the formal decision is taken, UPS said on Monday.
The collapse of the deal is a blow for TNT Express, which has struggled to turn around in a weak European market.
The U.S. delivery company had offered various concessions in a bid to win EU regulatory approval for its bid, including a proposal to sell warehouses and customer bases in about 15 countries, mainly in eastern Europe.
"We proposed significant and tangible remedies designed to address the EC's concerns with the transaction," Scott Davis, UPS chairman and chief executive said in a statement, expressing disappointment at the decision after months of talks.
"The combined company would have been transformative for the logistics industry, bringing meaningful benefits to consumers and customers around the world, while supporting growth in Europe in particular," Davis added. ($1 = 0.7493 euros)
(Reporting by Sara Webb; Editing by David Holmes)