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Monday, January 14, 2013

Hedge funds nurse heavy losses after UPS-TNT deal collapses, (NYSE: UPS)

United Parcel Service's decision to abandon its 5.2 billion euro ($6.9 billion) bid for TNT Express has left hedge funds nursing potential losses of more than $700 million, as the Dutch delivery firm's shares slid. So-called merger arbitrage funds - which make money betting on the outcomes of corporate events including takeovers - are estimated to have owned around 30 percent of TNT shares before Monday's news European anti-trust regulators would veto it, several sources familiar with the sector said.With TNT shares losing half their value when the market opened and ending the day down 41 percent, funds collectively could have lost more than 540 million euros ($722 million)."This was one of the only large, liquid, all-cash deals in Europe right now. It's going to have been really painful across the street," one merger arbitrage manager who owned TNT shares before selling them on Monday morning told Reuters.Funds had been buying shares in TNT ever since UPS made a 5.2 billion euro ($6.9 billion) play for the company last February.

United Parcel Service, Inc. (UPS) is a package delivery company that operates in the United States less-than-truckload industry, and the provider of global supply chain management solutions. Shares of UPS traded higher by 1.36% or $1.06/share to $78.98. In the past year, the shares have traded as low as $69.56 and as high as $81.79. On average, 3525420 shares of UPS exchange hands on a given day and today's volume is recorded at 5245633.