On Monday United Parcel Service, Inc. (UPS) said that it is abandoning its plan to purchase small Dutch delivering company TNT Express amid stiff opposition by European regulators.
The anticipated deal was worth €5.2 billion ($7 billion). UPS, the world’s number one package delivery company, was looking to purchase the Dutch company as a way to expand its global network. The deal would have been the biggest acquisition in UPS’s history.
The European Commission, the European Union’s executive arm, has shown its opposition to the deal because of certain antitrust implications. The regulators were concerned that after the deal UPS would hold too much market share in Europe, squeezing out competitors.
UPS and TNT officials were surprised by the position of the EC, believing they had worked out a deal that would address the EC’s concerns.
The EC’s stance serves as a huge blow to UPS as it attempts to increase its European position. Going forward, UPS will have to expand in Europe without any mergers or acquisitions.
UPS shares were up 94 cents, or +1.21%, during morning trading on Monday. The stock is up +6.27% over the past year.
The Bottom Line
Shares of United Parcel Service (UPS) have a 2.89% dividend yield, based on the latest intraday price of $78.93. The stock has technical support in the $74 price area. If the shares can firm up, we see overhead resistance around the $80-$82 price levels.
United Parcel Service, Inc. (UPS) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.
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