FedEx to separate FedEx Freight

The company states: “FedEx (FDX) announced that its Board of Directors has concluded a comprehensive assessment of the role of FedEx Freight as part of its portfolio and has decided to pursue a full separation of FedEx Freight through the capital markets, creating a new publicly traded company. The separation is expected to be achieved in a tax-efficient manner for FedEx stockholders and executed within the next 18 months. As two industry-leading public companies, FedEx and FedEx Freight will continue to pursue their growth strategies. The separation will allow for more customized operational execution along with more tailored investment and capital allocation strategies to serve the unique and evolving needs of both the global parcel and LTL markets. They will also maintain the strategic advantages of cooperation on key commercial, operational, and technology initiatives. Customers of both businesses will continue to enjoy the same superior service, speed, and coverage they have come to expect from FedEx. With revenue of $9.4 billion in fiscal 2024, FedEx Freight is the largest LTL carrier with the broadest network and fastest transit times in its industry. The company has deep and long-standing relationships with customers who value choice, simplicity, and reliability. With a focus on safety, facility utilization, revenue quality, and operational efficiency, FedEx Freight has maintained its leading market share position while increasing operating profit by nearly 25 percent on average per year over the last five years. The business has delivered approximately 1,100 basis points of operating margin expansion over the same period. FedEx Freight is expected to benefit from a strong balance sheet that will allow it to maintain and extend its leadership position in the LTL market. The Company’s intent is to execute the planned separation through a capital markets transaction, creating two independent publicly listed, industry-leading companies. The transaction is expected to qualify as a tax-free separation for U.S. federal income tax purposes. The Company expects to commence the separation process immediately, with the intent to execute the transaction within 18 months, subject to regulatory and certain other conditions, and final approval of the FedEx Board of Directors.”