FedEx Corp. recently announced that its Board of Directors has decided to separate FedEx Freight, making it a standalone company and the nation's largest LTL carrier.
The company said the separation is expected to be executed within the next 18 months.
A statement from FedEx said customers of both businesses will continue to enjoy the same superior service, speed, and coverage they have come to expect from FedEx.
“This is the right time to pursue a separation as we respond to the unique dynamics of the LTL market,” said Raj Subramaniam, FedEx Corp. president and chief executive officer. “This announcement is a testament to the strength of the business our team has built, and to our dedication to doing what’s best for our customers, our team members, and our stockholders. Through this process, we will unlock value for our freight business and position FedEx to create even greater value for stockholders.”
In a recently completed assessment, FedEx concluded there are strategic opportunities that arise from separating FedEx Freight into an independent company and substantial benefits from the continuing commercial collaboration of FedEx and FedEx Freight.
In a statement about the change, FedEx said that through a separation, both FedEx and FedEx Freight will benefit from:
- Enhanced Operational Focus and Strategic Execution: Deeper operational focus, accountability, and agility to meet customer needs will better enable both companies to capture profitable growth opportunities and unlock market value.
- Distinct and Compelling Investment Profiles: Separate public stock listings with distinct stockholder bases will enhance the value proposition for each company.
- Strong Balance Sheet and Capital Allocation Optionality: Each company will be well-capitalized, with flexibility to invest in profitable growth and return capital to stockholders
- Maintained Commercial, Operational, and Technology Synergies: The benefits of the existing FedEx and FedEx Freight relationships will be optimized through commercial agreements between the two entities to maintain operational and service-level continuity. Ongoing collaboration will be designed to improve the value propositions of both companies by accelerating speed, improving coverage, and driving efficiencies that will lower the cost to serve.
- A Shared Brand: The FedEx brand represents speed, reliability, and trust. These values will extend across both businesses with the new company continuing to operate under the FedEx Freight name.
The company said it 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.
