FedEx Agrees to Buy American Freightways

FedEx Corp. agreed to buy American Freightways Corp. for $950 million in cash and stock in a move to extend its next-day U.S. trucking service. FedEx will pay $28.13 in cash and stock for each share of the trucking company, and will also take on $250 million of debt. American Freightways stock rose 57% in early trading. American Freightways and FedEx’s Viking Freight unit will have combined annual revenue of more than $1.6 billion, FedEx said. FedEx, based in Memphis, Tenn., has been expanding its ground business in the face of competition from United Parcel Service Inc. and slowing growth of U.S. overnight deliveries. Viking and Harrison, Ark.-based American Freightways operate in the so-called less-than-truckload freight market. These carriers transport shipments from more than one customer on each truck. The acquisition of American Freightways, which had $1.17 billion in revenue last year, will add to earnings immediately, FedEx said. American Freightways climbed $10.13, or 57%, to close at $27.88 on Nasdaq, and FedEx closed up 10 cents at $45.27 on the NYSE.

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