UPS Announces Withdrawal of Offer for TNT Express

[cheryl]

United Parcel Service, Inc. (NYSE: UPS) today announced the withdrawal of its Offer for TNT Express (NYSE Euronext: TNTE).

As anticipated, the European Commission (EC) has 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. Given this outcome, UPS and TNT Express entered a separate agreement to terminate the Merger Protocol.

UPS proposed significant and tangible remedies designed to address the EC's concerns with the transaction concerning the 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.

 

[Catatonic]

United Parcel Service, Inc. (NYSE: UPS) today announced the withdrawal of its Offer for TNT Express (NYSE Euronext: TNTE).

As anticipated, the European Commission (EC) has 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. Given this outcome, UPS and TNT Express entered a separate agreement to terminate the Merger Protocol.

UPS proposed significant and tangible remedies designed to address the EC's concerns with the transaction concerning the 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.

And the person(s), who squandered $268M by not having a provision that there would be no penalty to either company if regulatory entities did not approve the merger, continue employment in a state of nonaccountability.

This aspect is such an obvious blunder, I would not be surprised if the Board steps in on this one.
But then again, perhaps they were part of the decision-making apparatus that overlooked this in the Terms and Conditions.

I had the opportunity to talk with a M&A lawyer from NY and she said this appeared to be a lack of "due diligence" and it was brought up as a learning opportunity to never allow this to happen. She deals with Financial M&A and some International so I assume she knows the area.
She also mentioned that UPS could sue the Legal Firm that put this deal together for lack of "due diligence".

If UPS does, we'll probably not hear about it.

 

[LongTimeComing]

I have always liked to know how high up one must be in order to not ever be held accountable for their actions. "Good ol' boy" crew still in place up there in the stratosphere of UPS levels?

 

[brownIEman]

And the person(s), who squandered $268M by not having a provision that there would be no penalty to either company if regulatory entities did not approve the merger, continue employment in a state of nonaccountability.

This aspect is such an obvious blunder, I would not be surprised if the Board steps in on this one.
But then again, perhaps they were part of the decision-making apparatus that overlooked this in the Terms and Conditions.

I had the opportunity to talk with a M&A lawyer from NY and she said this appeared to be a lack of "due diligence" and it was brought up as a learning opportunity to never allow this to happen. She deals with Financial M&A and some International so I assume she knows the area.
She also mentioned that UPS could sue the Legal Firm that put this deal together for lack of "due diligence".

If UPS does, we'll probably not hear about it.

It looks like something a tad more subtle went down. As far as I can tell, the EU commision did not outright squash the bid. They just kept blocking, asking for more concessions, and saying the offers of concessions UPS made were not enough or too confusing. My sense from articles I read is UPS basically withdrew the offer in the face of that never ending obstacle course.

 

[rudy5150]

its the unions fault lol

 

[worldwide]

And the person(s), who squandered $268M by not having a provision that there would be no penalty to either company if regulatory entities did not approve the merger, continue employment in a state of nonaccountability.

This aspect is such an obvious blunder, I would not be surprised if the Board steps in on this one.
But then again, perhaps they were part of the decision-making apparatus that overlooked this in the Terms and Conditions.

I had the opportunity to talk with a M&A lawyer from NY and she said this appeared to be a lack of "due diligence" and it was brought up as a learning opportunity to never allow this to happen. She deals with Financial M&A and some International so I assume she knows the area.
She also mentioned that UPS could sue the Legal Firm that put this deal together for lack of "due diligence".

If UPS does, we'll probably not hear about it.

By no means am I an expert on this but after looking around online, "reverse termination fees" are pretty common in these types of deals. Based on what UPS paid and the size of the deal, the fee was small compared to most of the examples below. I've got to beleive that UPS did their due dilligence and this contract language was a required part of the deal - after all, TNT had to essentially cease any new programs and expansion they were planning while this deal was going down for the past year. They are now in a much weaker position than they were before the proposed merger. I've got to beleive that UPS had full access to their books and now has very extensive knowledge of their operations, their customers and other critical data that can be helpful down the road.

Thomson Reuters/FX Alliance ($622.9 million, with a 2.3% termination fee of $14.5 million)
DigitalGlobe/Geoeye ($466.6 million, with a 4.3% termination fee of $20.0 million)
Aetna/Coventry Health Care ($5.63 billion, with a 3.0% termination fee of $167.5 million)
McKesson/PSS World Medical ($1.46 billion, with a 3.4% termination fee of $50 million)

There were 62 deals with antitrust reverse termination fees over the period January 1, 2005, through November 30, 2012. These fees have a median of 3.9% and a mean of 5.6%. The higher mean is due to some large outliers, including:

Google/Motorola Mobility ($11.9 billion, with a 21% termination fee of $2.5 billion)
Smithfield Foods/Premium Standard Farms ($674 million, with a 14.8% termination fee of $100 million)
Monsanto/Delta and Pine ($1.5 billion, with a 39.8% termination fee of $600 million)
Seagate/Maxtor ($1.9 billion, with a 15.8% termination fee of $300 million)

With the disclosure by AT&T that the total outlay of the antitrust reverse termination fee it paid in its deal with T-Mobile was $4.2 billion (and not the $6.0 billion often reported), the termination fee as a percentage of the $39 billion deal was 10.8%.

 

[Catatonic]

Good info worldwide.

 

[SignificantOwner]

By no means am I an expert on this but after looking around online, "reverse termination fees" are pretty common in these types of deals. Based on what UPS paid and the size of the deal, the fee was small compared to most of the examples below. I've got to beleive that UPS did their due dilligence and this contract language was a required part of the deal - after all, TNT had to essentially cease any new programs and expansion they were planning while this deal was going down for the past year. They are now in a much weaker position than they were before the proposed merger. I've got to beleive that UPS had full access to their books and now has very extensive knowledge of their operations, their customers and other critical data that can be helpful down the road.

Thomson Reuters/FX Alliance ($622.9 million, with a 2.3% termination fee of $14.5 million)
DigitalGlobe/Geoeye ($466.6 million, with a 4.3% termination fee of $20.0 million)
Aetna/Coventry Health Care ($5.63 billion, with a 3.0% termination fee of $167.5 million)
McKesson/PSS World Medical ($1.46 billion, with a 3.4% termination fee of $50 million)

There were 62 deals with antitrust reverse termination fees over the period January 1, 2005, through November 30, 2012. These fees have a median of 3.9% and a mean of 5.6%. The higher mean is due to some large outliers, including:

Google/Motorola Mobility ($11.9 billion, with a 21% termination fee of $2.5 billion)
Smithfield Foods/Premium Standard Farms ($674 million, with a 14.8% termination fee of $100 million)
Monsanto/Delta and Pine ($1.5 billion, with a 39.8% termination fee of $600 million)
Seagate/Maxtor ($1.9 billion, with a 15.8% termination fee of $300 million)

With the disclosure by AT&T that the total outlay of the antitrust reverse termination fee it paid in its deal with T-Mobile was $4.2 billion (and not the $6.0 billion often reported), the termination fee as a percentage of the $39 billion deal was 10.8%.

You're looking at this all wrong. Compare the TNT failure to successful acquisitions, not to failed acquisitions. $0 termination fee vs. $267 million.

 

[IVE GOTTA PACKAGE 4U]

Thats a good thing. UPS can afford to pay us our new raise tomorrow!!!!