FedEx Expanding in Europe - Analyst Blog
April 09 2012 - 5:30AM
Zacks
In a move to expand in Europe, FedEx
Corporation (FDX) will acquire Polish courier company Opek
Sp.z o.o (Opek). The financial terms of the deal were not
disclosed.
The acquisition, pending regulatory approvals, is expected to
close in summer. The purchase of Opek will increase FedEx Express’,
the unit of FedEx, access to nationwide domestic ground network.
Post-acquisition, the annual revenue and shipments of FedEx Express
is expected to be $70 million and 12.5 million, respectively.
The world's second-largest package delivery company intends to
expand its business organically and through small purchases in
Europe. This effort will aid FedEx to better compete with
United Parcel Service (UPS), which is spreading
smartly in Europe through smaller acquisitions.
Last month, United Parcel has agreed to acquire a Dutch shipping
company TNT Express that would boost its footprint in Europe, in
particular Britain, France, Germany and the Netherlands, making it
the global leader in the logistics industry with annual revenues of
more than €45 billion ($60 billion). The transaction, pending
various regulatory approvals, is expected to be over in the third
quarter of the calendar year and will further expand the company’s
presence in Asia and Latin America.
FedEx has a small presence in Europe with 3% of market share
compared with United Parcel, which would be enjoying around 16%
market share in Europe post-TNT acquisition. FedEx Express has been
expanding its European exposure over the last several years. The
company purchased ANC Holdings Limited, a UK domestic express
transportation company in 2006, and began its wholly owned
operation in Hungary after acquiring its service provider Flying
Cargo Hungary in 2007.
Additionally, FedEx Express broadened its presence by expanding
its European hub at Roissy-Charles de Gaulle Airport, Paris, France
in 2009, which makes it the largest FedEx hub outside the United
States. Further, the company reallocated its Central and Eastern
European hub to Cologne, Germany from Frankfurt in 2010, and opened
26 new stations across France, Germany, Italy, the Netherlands,
Northern Ireland and Sweden so far in this year.
We are currently reiterating our long-term Neutral rating on
FedEx. The stock retains a Zacks #3 (Hold) Rank for the short
term.
FEDEX CORP (FDX): Free Stock Analysis Report
UTD PARCEL SRVC (UPS): Free Stock Analysis Report
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