Acquiring and Integrating Businesses

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Date Submitted: 11/15/2012 08:43 AM

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Acquiring and Integrating Businesses

Acquiring another firm or business takes a lot of time, money, and research. Management has a lot of responsibility to stakeholders before making the decision to present an offer to the firm they want to purchase. From a recent article published on September 1, 2012 in The Economist, United Parcel Service is interested in acquiring another express-package firm in Europe. The name of this business is TNT. Most Americans aren’t familiar with this European company because of its larger competitor DHL. TNT operates the same business functions as UPS, Fed-Ex, and DHL while being smaller with a much more competitive price.

Earlier this year UPS made an offer to purchase the company and in March a price of $6.8 billion had been established. Now the acquisition of the business must be approved by the European Commission. If allowed to proceed without any disposals, the planned combination would have more than a quarter of the market in Britain and Italy, and nearly a quarter in France (Atlanta and Leipzig). This brings concerns to the EC in which they are investigating the acquisition and purchase approval for UPS. Regulators fear what kind of effect there will be on compeititon and innovation if TNT is elimintated in the current market.

From the stand point of UPS there were many things they had to look at when deciding to make an offer to purchase and acquire TNT in Europe. Obviously their focus is on gaining market power and increasing growth in Europe. UPS already has market power here in the United States and has been able to keep it against Fed-Ex and ran DHL back to Europe in 2009. Now it’s their turn to expand their global market even more. Knowing that TNT has a broad customer base in health-care and fashion industries (Atlanta and Leipzig) along with the expansive road network among the 39 European countries will help make the business thrive once paired and operated under UPS control.

As this acquisition moves...