Why Did UPS Lose TNT Express?

The European Commission effectively quashed United Parcel Service’s (NYSE:UPS) proposed acquisition of TNT Express over the weekend, leaving both companies in a weakened position, both structurally and monetarily, though TNT is facing a decidedly worse scenario, with shares plunging 43 percent on the news.

For UPS, the acquisition of TNT Express meant a significant boost in operations within Europe. UPS believed the combination of the two companies would have been a significant step forward in logistics around the world. Now UPS will go back to the drawing board, looking for another way into Europe, which could take a lot longer and require a lot more risk.

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But the ramifications for TNT Express are perhaps more critical. Alone, the company had been having difficulties with falling demand in the past years — among other issues. Its market share is believed to have eroded during acquisition talks with UPS. TNT Express had hedged its bets with the acquisition by UPS, with its chief executive leaving the company soon after UPS made the offer. As another acquisition doesn’t seem likely at this point, TNT Express will have to develop a new business strategy to regain its footing, and it will need a new chief executive…