FedEx fails to clinch Safexpress deal
Federal Express’ attempt to enter the domestic logistics business have received a setback with the failure of its attempt to buy out SafeExpress, one of the largest Indian logistics company.
This deal could have been significant for FedEx Express, because its competitors, DHL and TNT, have been successful in entering the domestic logistics segment in India through strategic acqusitions. TNT acquired Speedage, a divison of ARC India, in 2006 for an amount of Rs 200 crore (GBP 2.46 million), while DHL had acquired 81.03 pct of Blue Dart in 2004 for an amount of Rs 730 crore (GBP 8.97 million).
Had the deal gone through, it would have given FedEx a fairly huge chunk of the market in the express cargo, 3PL and warehousing segment.
The opportunity for integrated solutions in the logistics industry is huge and FedEx Express, the world’s largest express distribution company did not want to miss it. A proposed Central Sales Tax (CST) phase out, investments in infrastructure and technology as well as pick up in manufacturing outsourcing have been driving the demand for logistics solutions in India.
Something had to give. So, in a final meeting, held at one of the banker’s place, a couple of weeks back, FedEx walked away from the deal. Ernst & Young were the bankers of Safexpress, while FedEx was represented by JP Morgan. The anxiety in the minds of top officials with respect to Mr Jain’s inability to take a standing decision on the matter has been building up for a while now. The employees were not sure of their fate in the course of change in ownership.
