FedEx Corp. to purchase American Freightways for 0.81 times revenue, The

Weekly Corporate Growth Report, Dec 4, 2000

The Deal: The FedEx Corp. has agreed to purchase American Freightways for $950 million in cash and stock. Fedex will combine American Freightways with its current Viking Freight unit to create the second-largest company in handling ground deliveries of shipments of less than a truckload. According to the terms of the deal, FedEx will also assume $250 million of American debt.

Discussion: American Freightways is a less-than-truckload carrier providing scheduled, for-hire shipping services in 39 states in the eastern, midwestern, southeastern and southwestern United States. Through alliances, American Freightways has been expanding beyond the continental United States to provide service in Alaska, Canada, Guam, Hawaii and Latin America. It operates more than 6,100 tractors and 15,500 trailers, and it has more than 250 freight terminals. To keep costs down, the company uses nonunion employees.

The FedEx Corp. is a holding company of five key subsidiaries that deliver a significant market share in the Internet economy. Its Federal Express unit is the world's No. 1 express transport firm, delivering some 3.3 million packages daily and its FedEx Ground unit ships small packages in North America. Surface-expedited carrier FedEx Custom Critical specializes in urgent deliveries. FedEx Global Logistics provides just-in-time delivery, warehouse management and distribution services and also runs Viking Freight, a less-than-truckload carrier in the western United States. FedEx Trade Networks offers customs brokerage services.