The European Commission’s decision to prevent UPS from acquiring TNT Express “risks reducing competition, not increasing it”, an analyst at Transport Intelligence said.
UPS has now pulled out of its multi-billion Euro plans to take over TNT Express, which the logistics analyst believes highlights the scale of the challenges the US parcel carrier faced in regard to meeting the regulatory requirements.
Transport Intelligence head of consultancy Joel Ray said: “Their decision making process looks flawed, caused by a fundamental lack of understanding of the industry. It seems to have been driven by a desire to engineer a market structure through political motivations. European shippers would’ve gained from the acquisition through a strong new road and air based player.”
In regard to what TNT is likely to do next, analysts believe that the removal of the offer will prevent other candidates from wanting to take over the company, including possible candidate FedEx.
Ray said: “It may be quietly happy that its rival’s strategy has been frustrated, yet the prospects of a bid for TNT Express, possibly at a lower price than that of UPS, might also seem obstructed by the same logic that terminated the UPS offer.”
UPS is likely to consider other European acquisitions; Apex Insight told MT.co.uk that the US-based firm could possibly consider taking over another European carrier, with Royal Mail group division General Logistics Systems (GLS) the most likely candidate.
Frank Proud, analyst at Apex Insight said: “They could look at buying something else and the most likely consideration is GLS- they have a road network.”
Ray also agreed that GLS is a likely target if UPS is considering alternative takeovers: “Assuming this is regarded a worthwhile prospect, the potential targets include GLS, which has a smaller, yet not dissimilar, road network to TNT Express.”
