FedEx to Buy Trucking Firm, Expanding Delivery Ability
Federal Express Corp. on Monday agreed to buy the trucking company Caliber System Inc. for about $2.4 billion in stock, expanding FedEx’s ability to compete with package delivery rivals like United Parcel Service of America Inc.
The deal comes as Atlanta-based UPS is still feeling some effects from a strike this summer by 185,000 Teamsters.
UPS had estimated that it lost 5% of its customers and $600 million in revenue during the strike.
The FedEx-Caliber combination would generate $15 billion a year in revenue and employ 170,000 people worldwide, the companies said.
Caliber System’s subsidiaries include Roadway Package System Inc., which delivers packages between businesses.
“This acquisition creates a powerful combination that will propel both companies to new heights,” Frederick W. Smith, chairman and chief executive of Federal Express, said in a statement.
Memphis-based Federal Express said it will create a new holding company, FDX Corp., to oversee Federal Express and Caliber’s subsidiaries. Smith will be chairman, president and CEO.
Federal Express provides delivery of 2.9 million items daily in 212 countries. It employs about 137,000 people and reported sales of $11.5 billion for the fiscal year ending May 31.
Akron, Ohio-based Caliber, which also provides logistics and related information services, employs about 33,500 people.
In New York Stock Exchange trading, Caliber stock rose $3.94 to close at $59.25, while Federal Express shares fell $3.50 to $75.50. The transaction must be approved by stockholders of both companies and the federal government.
Under the Federal Express deal, Caliber System shareholders will get 0.8 shares of stock in a new holding company for each share of Caliber System stock.
