By Ben Meyer / www.americanshipper.com / February 19th, 2016
FedEx Corp.’s archrival said it is appealing the unconditional regulatory approval of the $4.8 billion acquisition “as part of ensuring a fair and thorough investigation,” according to a report in the Wall Street Journal.
UPS Inc. has confirmed it filed an appeal with in Brazil’s Conselho Administrativo de Defesa Econômica (CADE) regarding the unconditional approval of the $4.8 billion acquisition of TNT Express by FedEx Corp., according to a report in the Wall Street Journal.
American Shipper reported yesterday that FedEx and TNT announced in a joint press released an unnamed third party was appealing the regulatory approval of the deal in Brazil, causing speculation that third party might be UPS.
For its part, UPS may still be upset over its own failed attempt to purchase Netherlands-based TNT Express back in 2012. Those plans were abandoned due to opposition from regulators in the European Union, which has already approved the FedEx-TNT tie-up.
“The review process in Brazil contains an option to submit an application to the senior level of CADE to consider a more in-depth review of an initial finding,” a UPS spokesman told WSJ Thursday. ”This option has been exercised as part of ensuring a fair and thorough investigation.”
Although the appeal process could potentially delay the deal, FedEx and industry analysts say it shouldn’t pose a legitimate threat to its completion.
“Despite this appeal, we believe the merger will eventually be approved,” equity research firm Cowen and Co. said in a client note. “As we previously stated here, third-parties had two weeks to appeal the decision which would cause Brazilian authorities to re-review the merger. Brazilian regulators originally approved the merger without conditions and we do not believe a second review will turn up new issue.
“The deal should still close in 1H16,” it added. “The merger needs to be completed by June 8th or an extension must be negotiated with TNT management.”
A spokesperson for FedEx told American Shipper the companies “remain confident” the transaction will be completed in the first half of 2016.
The deal has also received approval from the United States Federal Trade Commission, but still requires sign-off from anti-trust authorities in China.
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