EU to detail objections to UPS, TNT deal: sources
AMSTERDAM/BRUSSELS (Reuters) - EU antitrust regulators will next week tell United Parcel Service Inc (UPS.N) that its bid for TNT Express (TNTE.AS) will hurt competition, two sources close to the matter said, forcing the U.S. company to offer concessions or risk a veto.
The European Commission, which is examining the 5.2-billion-euro ($6.71 billion) deal, will set out its concerns at a meeting with UPS officials on Tuesday before sending a statement of objections or charge sheet, the people said on Wednesday.
One of the sources said UPS had not offered any concessions to date, preferring to wait until the EU watchdog detailed the potential problems.
Shares in Dutch delivery group TNT Express (TNTE.AS) ended unchanged at 8.15 euros on Wednesday. The stock fell as much as 2.5 percent in early trading after the Financial Times reported that the EU watchdog would object to the deal.
TNT Express shares have been trading below 9 euros since the end of July, compared with UPS' bid of 9.50 euros per share.
UPS may find it difficult to make concessions to soothe regulatory concerns about the deal, the biggest in its 105-year history, said Andre Mulder, an analyst with brokerage Kepler.
"We think the likelihood of the takeover being cancelled has increased a bit further," he wrote in a note.
UPS said it would continue to work with the Commission. "We are confident the deal will go through," a UPS spokesman said.
The Commission is worried that the proposed merger will reduce the number of players, leaving the combined entity to compete with only Deutsche Post's DHL (DPWGn.DE) and U.S. peer FedEx (FDX.N).
UPS is arguing that it faces competition from national postal companies such as French mail company DPD and Royal Mail's GBPO.UL European express parcel service GLS, as well as freight forwarders like Swiss companies Kuehne & Nagel (KNIN.VX) and Panalpina (PWTN.S).
Analysts said the merged company's strong market share in Britain, Italy and the Netherlands and TNT's dominance in the intra-Europe express market may mean it has to make concessions in these areas.
The Commission has set a January 15 deadline for its decision. ($1 = 0.7751 euros)
(Reporting by Gilbert Kreijger and Foo Yun Chee; Editing by Hans-Juergen Peters and Helen Massy-Beresford)
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