8-KMaterial Agreements

UNITED PARCEL SERVICE INC 8-K Report, Agreement Terminated (Jan 28, 2013)

Filed January 28, 2013For Securities:UPS

Summary

United Parcel Service, Inc. (UPS) filed an 8-K report on January 27, 2013, to disclose the termination of its material definitive agreement with TNT Express N.V. The company had entered into a Merger Protocol on March 19, 2012, for an all-cash acquisition of TNT Express for €9.50 per share. However, due to the European Commission's intention to prohibit the acquisition, UPS and TNT Express mutually agreed to terminate the merger on January 22, 2013. This termination will result in UPS paying a termination fee of €200 million to TNT Express.

Key Highlights

  • 1Termination of the proposed acquisition of TNT Express N.V. by UPS.
  • 2The European Commission signaled its intention to block the acquisition, citing competition concerns.
  • 3A termination agreement was executed on January 22, 2013, between UPS and TNT Express.
  • 4UPS will pay a termination fee of €200 million to TNT Express.
  • 5The termination is expected to be formally announced once the European Commission issues its final decision.
  • 6This development removes the uncertainty surrounding the acquisition and its impact on UPS's strategic and financial outlook.
  • 7The company's CFO, Kurt P. Kuehn, signed the filing.

Frequently Asked Questions

The acquisition was terminated because the European Commission informed UPS and TNT Express that it intended to prohibit the deal, citing competition concerns. Consequently, both companies mutually agreed to terminate the merger.

The primary financial impact disclosed is a termination fee of €200 million that UPS is obligated to pay to TNT Express. This fee will be paid within ten business days of the European Commission's formal decision to prohibit the acquisition.

UPS expects to announce the withdrawal of its offer on or one business day after the European Commission issues a formal decision to prohibit the acquisition. The termination agreement will then supersede all previous understandings regarding the merger.

The termination agreement also includes provisions for the full and final discharge of claims between the parties, the treatment of confidential information, and the handling of costs. Additionally, there are agreements regarding the non-solicitation of employees.