FedEx Corp. is officially moving forward with the spinoff of its less-than-truckload unit, FedEx Freight, following formal approval from its board of directors. The Memphis-based company announced Wednesday that the separation will conclude June 1.
Under the approved plan, FedEx (NYSE: FDX) will execute a pro rata distribution of 80.1% of the outstanding common shares of FedEx Freight to its shareholders. Investors registered as of Friday will receive one share of the new independent company for every two FedEx shares they own. FedEx will retain a 19.9% ​​stake in FedEx Freight, which it intends to divest within 24 months by paying debt or distributing dividends to shareholders.
“Today’s announcement is an important step as we prepare for a seamless separation of the FedEx Freight business on June 1,” said Brad Martin, CEO of the FedEx Board and incoming Chairman of the FedEx Freight Board. “As independent organizations, FedEx and FedEx Freight will leverage their respective industry leadership positions to serve customers with excellence while creating value for their shareholders.”
FedEx Freight, the nation’s largest LTL carrier, is scheduled to begin trading on the New York Stock Exchange under the symbol “FDXF” on June 1, while the legacy company will continue to trade under “FDX.”
The company said the distribution is expected to be tax-free for U.S. federal income tax purposes.
By spinning off freight operations from its broader express and ground networks, FedEx aims to give investors more targeted exposure to the LTL market while allowing the legacy business to focus on its transformation strategy.
FedEx began LTL operations in 1998 with the acquisition of Viking Freight. It acquired American Freightways in 2001 and Watkins Motor Lines in 2006. In 2011, it merged its national (Watkins) and regional (Viking and American Freightways) operations into a network offering priority and economy service.
FedEx Freight has 40,000 employees, 365 terminals (26,000 doors) and 30,000 vehicles (17,000 tractors), generating approximately $9 billion in annual revenue.
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