FedEx US to acquire Parcel Direct
FedEx Corp has announced an agreement to acquire Parcel Direct, a division of Quad/Graphics, for USD120 million in cash. The transaction is expected to close during the second fiscal quarter and is subject to customary conditions, including Hart-Scott-Rodino clearance.
Based on Parcel Direct’s current size, this acquisition is not expected to have a material effect on the fiscal 2005 financial results of FedEx.
Parcel Direct will be a subsidiary of FedEx Ground and will cater to customers in the fast-growing e-tail and catalogue industries.
“This acquisition is consistent with our long-standing strategy to acquire leading businesses that meet emerging market needs,” said Daniel Sullivan, president & CEO of FedEx Ground. “We are confident that we can aggressively grow this new business by combining Parcel Direct’s cost-effective and scalable network with FedEx sales, marketing and financial resources.”
Parcel Direct, based in New Berlin, Wisconsin, has about 450 employees and generated approximately USD250 million of gross revenue in 2003 (USD130 million in net revenue). The company has developed a successful model for parcel consolidation tailored to meet the needs of targeted high-volume shippers, and takes advantage of the US Postal Service’s Parcel Select service.
The services provided by Parcel Direct will complement the strategic alliance that FedEx already enjoys with the United States Postal Service.
FedEx Express currently has a seven-year, USD7 billion contract to provide transportation services to the USPS. Agreements between the two companies also cover FedEx Express’s provision of transportation of the co-branded Global Express Guaranteed, and the placing of nearly 5,000 FedEx Express Drop Boxes at local Post Offices around the country.
