FedEx Corp., Memphis, TN, last week announced the final results of the successful completion of its tender offer, made through its wholly owned subsidiary FDX Inc., to buy up to 50.1 percent of the outstanding shares of common stock and associated rights of American Freightways Corp. at a price of $28.13 per share.
In November, FedEx acquired AF, Harrison, AR, for $950 million in cash and stock. AF is a less-than-truckload carrier serving 40 states, mostly in the Midwest and on the East Coast. FedEx already owns Viking Freight, another LTL carrier.
LTL carriers usually handle bulk freight shipments weighing more than 150 pounds from several companies on the same truck. LTL carriers can transport goods entirely by truck and still meet day-definite delivery requirements. LTLs do not rely on air transportation — which, though reliable, can be expensive — therefore becoming more popular among customers. Industry experts predict that the regional LTL market will grow by nearly 10 percent per year from 2000 to 2004.
The acquisition will extend FedEx's reach by expanding its next-day regional LTL freight service with all-points coverage in 48 states in a greater number of regional delivery markets. Before the acquisition, both Viking and AF relied on third-party transportation services to expand their coverage areas.
AF is the fourth-largest in that segment of the delivery market. The joint revenues of AF and Viking, however, will create the second-largest regional LTL freight unit in the United States with revenue of more than $1.6 billion.
The tender offer will be followed by the merger of AF with and into FDX. The merger is subject to the satisfaction of certain conditions, including the approval of AF's shareholders. It is anticipated, however, that the merger will be completed on or about Feb. 9. As a result of the merger, AF will become a wholly owned subsidiary of FedEx.
The depositary for the tender offer, EquiServe Trust Co. N.A., will issue payment promptly for the shares accepted under the tender offer. After the purchase of the shares, FedEx and FDX will own about 50.1 percent of the outstanding shares of AF.
