By Laura Stevens
FedEx Corp. disclosed in its quarterly report with the
Securities and Exchange Commission that the price it paid in
January for third-party logistics provider GENCO Distribution
System Inc. was $1.4 billion.
Genco specializes in the product returns business, processing
more than 600 million items annually for major companies, including
retailers, in addition to offering other supply-chain services.
FedEx funded the purchase using a portion of the proceeds from a
January debt issuance, according to the filing.
Additionally, FedEx disclosed it paid $42 million in cash from
operations for the acquisition in December of Bongo International
LLC, an e-commerce platform that facilitates international
customers purchasing items from domestic websites.
"These acquisitions will allow us to enter new markets, as well
as strengthen our current service offerings to existing customers,"
FedEx said in the filing.
FedEx announced the purchase of GENCO in December and completed
the acquisition on Jan. 30. From that point, GENCO contributed $87
million in revenue to the FedEx Ground segment's total $3.39
billion of revenue in the third quarter ended Feb. 28, according to
the filing.
In December, FedEx said GENCO generated $1.6 billion in annual
revenues and employed 11,000 people.
FedEx customers have been asking for a way to manage product
returns better, and GENCO allows the delivery giant to provide
that, Henry Maier, chief executive of FedEx Ground, said on a
conference call with analysts on Wednesday.
"We think that there's significant transportation opportunities
in their business and looking at this acquisition going forward, we
believe that it's a great add to the FedEx portfolio," Mr. Maier
added.
On Wednesday, FedEx reported strong financial results, with
profit up 53% to $580 million, as the benefit from the company's
express division's restructuring grew, combined with lower fuel
costs, a successful holiday season and a milder winter.
Write to Laura Stevens at laura.stevens@wsj.com
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