- Unlocks significant value for FedEx stockholders through
creation of a new publicly listed less-than-truckload (LTL)
industry leader
- Preserves commercial and operational synergies between both
companies
- Proposed separation enables greater strategic, operational, and
financial execution for each company and its stakeholders
FedEx Corp. (NYSE: FDX) today announced that its Board of
Directors has concluded a comprehensive assessment of the role of
FedEx Freight as part of its portfolio and has decided to pursue a
full separation of FedEx Freight through the capital markets,
creating a new publicly traded company.
The separation is expected to be achieved in a tax-efficient
manner for FedEx stockholders and executed within the next 18
months.
As two industry-leading public companies, FedEx and FedEx
Freight will continue to pursue their growth strategies. The
separation will allow for more customized operational execution
along with more tailored investment and capital allocation
strategies to serve the unique and evolving needs of both the
global parcel and LTL markets. They will also maintain the
strategic advantages of cooperation on key commercial, operational,
and technology initiatives. Customers of both businesses will
continue to enjoy the same superior service, speed, and coverage
they have come to expect from FedEx.
“This is the right time to pursue a separation as we respond to
the unique dynamics of the LTL market,” said Raj Subramaniam, FedEx
Corp. president and chief executive officer. “This announcement is
a testament to the strength of the business our team has built, and
to our dedication to doing what’s best for our customers, our team
members, and our stockholders. Through this process, we will unlock
value for our Freight business and position FedEx to create even
greater value for stockholders.”
“Over the last 50 years, FedEx has built an unmatched global
platform that has produced significant value for our stockholders
and opportunities for our team members,” said R. Brad Martin, vice
chairman of the Board and chairman of the Audit and Finance
Committee who led the Board’s oversight of the strategic analysis.
“Building upon that powerful foundation, and following a careful
assessment of our portfolio, the FedEx Corporation Board is
confident that a separation of FedEx Freight will drive continued
growth and value creation.”
Strategic Rationale
In its recently completed assessment, FedEx concluded there are
strategic opportunities that arise from separating FedEx Freight
into an independent company and substantial benefits from the
continuing commercial collaboration of FedEx and FedEx Freight.
Through a separation, both FedEx and FedEx Freight will benefit
from:
- Enhanced Operational Focus and Strategic Execution:
Deeper operational focus, accountability, and agility to meet
customer needs will better enable both companies to capture
profitable growth opportunities and unlock market value. FedEx will
continue executing its strategic initiatives, including DRIVE,
Network 2.0, and Tricolor.
- Distinct and Compelling Investment Profiles: Separate
public stock listings with distinct stockholder bases will enhance
the value proposition for each company.
- Strong Balance Sheet and Capital Allocation Optionality:
Each company will be well-capitalized, with flexibility to invest
in profitable growth and return capital to stockholders.
- Maintained Commercial, Operational, and Technology
Synergies: The benefits of the existing FedEx and FedEx Freight
relationships will be optimized through commercial agreements
between the two entities to maintain operational and service-level
continuity. Ongoing collaboration will be designed to improve the
value propositions of both companies by accelerating speed,
improving coverage, and driving efficiencies that will lower the
cost to serve.
- A Shared Brand: The FedEx brand represents speed,
reliability, and trust. These values will extend across both
businesses with the new company continuing to operate under the
FedEx Freight name.
FedEx Value Proposition
FedEx pioneered the express transportation industry more than 50
years ago and remains the industry leader today. In fiscal year
2024, FedEx revenue totaled $78.3 billion across its remaining
business segments. The Company provides a range of rapid, reliable,
time- and day-definite delivery and related supply chain technology
services to more than 220 countries and territories through an
integrated air-ground express network. FedEx is well-positioned to
continue to deliver significant value to its stockholders through
its transformation and strategic initiatives, focused on reducing
the company’s cost to serve while helping customers compete and win
with the world’s smartest and most efficient logistics ecosystem.
The initiatives underway through DRIVE are expected to create $4
billion in cost savings by the end of fiscal year 2025, while
Network 2.0 is targeted to generate savings of $2 billion by the
end of fiscal year 2027, supporting enhanced profitability and
driving greater flexibility and efficiency across the network.
FedEx remains committed to a continued strong balance sheet at both
entities while continuing to reduce capital intensity and increase
capital returns.
FedEx Freight Value
Proposition
With revenue of $9.4 billion in fiscal 2024, FedEx Freight is
the largest LTL carrier with the broadest network and fastest
transit times in its industry. The company has deep and
long-standing relationships with customers who value choice,
simplicity, and reliability. With a focus on safety, facility
utilization, revenue quality, and operational efficiency, FedEx
Freight has maintained its leading market share position while
increasing operating profit by nearly 25 percent on average per
year over the last five years. The business has delivered
approximately 1,100 basis points of operating margin expansion over
the same period. FedEx Freight is expected to benefit from a strong
balance sheet that will allow it to maintain and extend its
leadership position in the LTL market.
Transaction Process
The Company’s intent is to execute the planned separation
through a capital markets transaction, creating two independent
publicly listed, industry-leading companies. The transaction is
expected to qualify as a tax-free separation for U.S. federal
income tax purposes.
The Company expects to commence the separation process
immediately, with the intent to execute the transaction within 18
months, subject to regulatory and certain other conditions, and
final approval of the FedEx Board of Directors.
Goldman Sachs & Co. LLC is serving as the financial advisor
and Skadden, Arps, Slate, Meagher & Flom LLP is serving as
legal counsel.
Corporate Overview
FedEx Corp. (NYSE: FDX) provides customers and businesses
worldwide with a broad portfolio of transportation, e-commerce and
business services. With annual revenue of $87 billion, the company
offers integrated business solutions utilizing its flexible,
efficient, and intelligent global network. Consistently ranked
among the world's most admired and trusted employers, FedEx
inspires its more than 500,000 employees to remain focused on
safety, the highest ethical and professional standards, and the
needs of their customers and communities. FedEx is committed to
connecting people and possibilities around the world responsibly
and resourcefully, with a goal to achieve carbon-neutral operations
by 2040. To learn more, please visit fedex.com/about.
Certain statements in this press release may be considered
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act, such as statements regarding
expected benefits and synergies to be realized by FedEx and FedEx
Freight in the separation, the timing of the proposed separation,
future financial targets, business strategies, management’s views
with respect to future events and financial performance, and the
assumptions underlying such expected cost savings, targets,
strategies, and statements. Forward-looking statements include
those preceded by, followed by or that include the words “will,”
“may,” “could,” “would,” “should,” “believes,” “expects,”
“forecasts,” “anticipates,” “plans,” “estimates,” “targets,”
“projects,” “intends” or similar expressions. Such forward-looking
statements are subject to risks, uncertainties, and other factors
which could cause actual results to differ materially from
historical experience or from future results expressed or implied
by such forward-looking statements. Potential risks and
uncertainties include, but are not limited to, our ability to
successfully execute the separation transaction; our ability to
obtain any consents or approvals required to complete the
separation; potential uncertainty during the pendency of the
separation transaction that could affect FedEx’s financial
performance; the possibility that the separation transaction will
not be completed within the anticipated time period or at all; the
possibility that the separation transaction will not result in the
intended benefits; the possibility of disruption, including changes
to existing business relationships, disputes, litigation, or
unanticipated costs in connection with the separation transaction;
uncertainty of the expected financial performance of FedEx or FedEx
Freight following completion of the transaction; negative effects
of the announcement or pendency of the transactions on the market
price of FedEx’s securities and/or on the financial performance of
FedEx; evolving legal, regulatory, and tax regimes; changes in the
economic conditions in the global markets in which we operate;
actions by third parties, including government agencies; our
ability to successfully implement our business strategy and global
transformation program and optimize our network through Network
2.0; our ability to achieve our cost-reduction initiatives and
financial performance goals; and other factors which can be found
in FedEx Corp.’s and its subsidiaries’ press releases and FedEx
Corp.’s filings with the Securities and Exchange Commission. Any
forward-looking statement speaks only as of the date on which it is
made. We do not undertake or assume any obligation to update or
revise any forward-looking statement, whether as a result of new
information, future events, or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241219594478/en/
Media Contact: Caitlin Maier 901-434-8100
Mediarelations@fedex.com Investor Relations Contact: Jeni
Hollander 901-818-7200 ir@fedex.com
FedEx (NYSE:FDX)
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