United Parcel Service, Inc.
) and TNT Express have once hit the headlines for their attempt
to win back the lost ground on proposed acquisition plans. Going
by market reports, UPS has appealed against the European Union
(EU) regulator's decision of forbidding the acquisition of Dutch
shipping company TNT Express.
Previously, UPS had stated that it had dropped its acquisition
plans. However, the company aims to challenge the regulatory
ruling for clarifications on the European Commission's assessment
on the competitive landscape in Europe that forced regulators to
discard the UPS-TNT deal from materializing. Earlier this year,
regulatory authorities in the Competition Commission rejected the
deal citing that it would increase express freight rates in 29
The commission feared that if the deal materializes, UPS is
will emerge as the biggest player in the delivery business in the
European continent, leaving only two other big peers - DHL
). Further, the deal would consolidate UPS' position as a global
leader in the international market with annual revenues of more
than €45 billion ($60 billion).
In respect to these issues, UPS planned to sell TNT Express'
assets to the European Union to meet the antitrust requirements
for the completion of the impending acquisition of the later. The
two companies reportedly decided upon selling their business
units to 13 countries of the European Union and provide access to
UPS' networks to secure the $6.8 billion acquisition deal.
According to reports, UPS was making efforts through informal
channels to persuade FedEx to buy certain assets of TNT to secure
the deal. However, FedEx turned down the deal showing no
inclination towards acquiring TNT's assets.
We believe UPS' decision to seek assessment over the rejection
of the TNT acquisition may revive the company's effort to expand
through acquisitions. A proper insight on the regulatory and
competitive environment in Europe amid economic uncertainties
would help curb contingencies for UPS while pursuing acquisition
and merger policies in this continent.
UPS operating with other industry players like
Expeditors International of Washington Inc.
) retains a Zacks Rank #3, implying a Hold rating.
Air Transport Services Group, Inc.
) with a Zacks Ranks #2 (Buy) is another stock in this sector we
see as worth considering.
AIR TRANSPT SVC (ATSG): Free Stock Analysis
EXPEDITORS INTL (EXPD): Free Stock Analysis
FEDEX CORP (FDX): Free Stock Analysis Report
UTD PARCEL SRVC (UPS): Free Stock Analysis
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