Freight giant UPS has officially withdrawn its €5.16 billion ($6.77 billion) offer for Netherlands-based rival TNT Express after the European Commission formally rejected the merger plans citing competition concerns.
Although UPS had proposed a number of remedies to persuade the EC to approve the deal - including selling TNT subsidiaries in a total of 17 European countries and, shortly before the deadline, offering any buyer for those businesses access to its intra-European air network for a five-year period - the authorities were not persuaded.
The regulator says the only suitable and realistic purchaser of the divested operations would have been FedEx, as a hypothetical deal with Germany's DHL would have raised similar competition concerns.
Therefore, if a company outside of the big four integrators were to succeed with an acquisition, "there was a risk that after five years, the purchaser would not be able to find a suitable air transport solution as a substitute for the temporary access offered by UPS", says the Commission.
Although French postal giant La Poste expressed a last-minute interest in the divested businesses, likely to be operated by its DPD subsidiary, the Commission concluded they were not a "suitable purchaser", partly based on the low probability of it investing in its own air network "on the basis of the volume in express deliveries involved".
This, it says, "increased the serious risks" that it would prove an ineffective remedy.
UPS says while it is "disappointed" by the EC's decision, it will continue to focus on its growth strategy.
Irish-based ASL Aviation Group had previously agreed to acquire TNT Airways and Spanish operation Pan Air Lineas Aereas, on condition that the UPS-TNT merger proceeded.
ASL declined to comment.