UPS-TNT merger makers 'unlikely to make deal' before Feb 28 deadline

ATLANTA-based UPS is facing an uphill struggle to win EU approval over its acquisition of Europe's second largest parcel delivery company by its February 28 deadline following objections from the European anti-competition body, says American Shipper.

The drawn-out process has seen TNT's share prices fall from EUR9.50 to EUR7.22 revealing the doubt that surrounds the sale.

The deal is not "strategically vital" for a company with strong cash flows and a strong foothold in Europe, said US-based analysts Stifel Nicolaus on the UPS-TNT deal. They forecast a one-third chance of the deal being finalised.

"The China and Brazil operations they would acquire with TNT are rather insignificant, are losing money, and could be achieved independently by UPS (for less money), in our opinion," they said in a note.

The US$5.16 billion offer will cost the company $225 million in a termination fee if the deal falls behind the deadline or parties fail to agree on concessions set out by the European Commission.

These "substantial" concessions are to prevent price collusion or anti-competitive problems, said the European Commissioner for Competition policy Joaquin Alumnia.

Concessions may include handing over some of its parcel operations in Europe or through direct sharing of its network to competitors, in order to meet the EC half way.