FedEx Announces Spin-Off of Freight Division to Form a New Public Entity
FedEx Corporation made a significant announcement on Thursday, December 19, 2024. The logistics giant plans to separate its FedEx Freight division into an independent publicly traded company within the next 18 months. This strategic move will result in the creation of two industry-leading logistics firms.
The separation will spin off FedEx Freight, the largest less-than-truckload (LTL) carrier in the United States with a fiscal 2024 revenue of $9.4 billion. The new company will retain the FedEx Freight name and continue to operate with the broadest network and fastest transit times in its industry. Meanwhile, the remaining FedEx will comprise the company’s air, ground, and parcel segments, which generated a whopping $78.3 billion in fiscal 2024 revenue.
“This is the right time to pursue a separation as we respond to the unique dynamics of the LTL market,” said Raj Subramaniam, FedEx President and CEO. “Through this process, we will unlock value for our Freight business and position FedEx to create even greater value for stockholders.”
The transaction is expected to be tax-efficient for shareholders. It will allow both companies to pursue customized operational strategies while maintaining commercial and technological synergies through ongoing collaboration. FedEx Freight has shown impressive growth, with an increase in operating profit by nearly 25% on average per year over the last five years. It also delivered approximately 1,100 basis points of operating margin expansion during that period.
In the wake of this announcement, FedEx shares jumped 8.9% in after-hours trading. The company also reported second-quarter fiscal 2025 results, with adjusted earnings of $4.05 per share on revenue of $22 billion. However, it lowered its full-year outlook citing weak U.S. domestic demand.
Source: FedEx Investor News