Buyout !!??

Discussion in 'FedEx Discussions' started by moreluck, Jul 9, 2007.

  1. moreluck

    moreluck golden ticket member

    FedEx could lure private equity interest: Barron's
    Sunday July 8, 4:00 pm ET

    NEW YORK (Reuters) - Package delivery company FedEx Corp. (NYSE:FDX - News) could become a target for private equity buyers because of its modest valuation and turnaround potential, Barron's reported in its July 9 issue.

    With an enterprise value of $35 billion, FedEx is valued at about six times expected fiscal 2008 earnings before interest, taxes, depreciation and amortization, or Ebitda.

    "One need not get anywhere near the recent double-digit Ebitda valuations of (leveraged buyouts) in other industries to get to a share price more than 20 percent above current levels," Barron's said in the report.
    The attraction for buyout firms would be the potential to cut capital expenditures to help finance a deal as well as the opportunity to turn around ailing retail unit FedEx Kinko's.
    Even without a buyout, which Barron's said may not be imminent or even likely, FedEx shares should perform fine on their own, the investor weekly said.
    FedEx shares, which are essentially flat this year, closed on Friday at $110.84.
  2. moreluck

    moreluck golden ticket member

    OK, here's what I think.....I think Fred had a golf date or lunch date with some guy from Barrons and he mentioned a "what if" situation. He did this to drive up the FDX stock because it hasn't been above $113 since November 3, 2006 and he wanted to boost it with a rumor. :wink:
  3. over9five

    over9five Senior Member Staff Member

    Hmmm, what a coincidence! Our stock hasn't been above $113 since...
  4. Puzzled user

    Puzzled user Guest

    Hubby's company USF Holland was told they and parent company were bought out today by DHL no info on internet that I have found yet.
  5. clegghorn

    clegghorn Guest

    Ask your source where they got that information. Sounds like an off strategy move.
  6. Clegghorn

    Clegghorn Guest

  7. DS

    DS Fenderbender

    yea,like the ups store...
  8. flake

    flake New Member

    FDX is going to have major labor issues over the next 2 years. The Teamsters have their cross hairs on the FDX Ground drivers and can easily demonstrate how they work well with UPS to have a win-win partnership. FDX is being sued left and right, FDX is dodging paying taxes, FDX's Fred Smith is getting doors slamed in his face in Washington as they are finally seeing and smelling the fishy FDX tactics and all Fred can do is what he does best ... continue to play politics and roll the FDX dice. ATTENTION ALL FDX EMPLOYEES: Wake-up!!!! Fred is lining his pockets with billions off your completely underpaid hard work. If your a pro-FDX employee...then you have tunnel vision and are a sucker for their propoganda. Do yourself a favor......get smarter!
  9. seagull4

    seagull4 New Member

    Future of FedEX

    FedEx will have a few strong years,but unions will cause issues with their cost to serve and put them at parity with us.
  10. MrFedEx

    MrFedEx Engorged Member

    "Flake" has hit the nail directly on the head with his posting. FedEx employees of all the divisions need to wake up NOW and see what's really going on. It pains me to see employees who actually think that things will get better if we just stand around and do nothing. As long as we're willing to bend over and grab our ankles, Fred will take full advantage. Smith would sell his own mother if it meant another penny in his pocket, and he's working overtime to try and block any legislative moves that might mean unionization, particularly in the Express and Ground divisions. I was told recently that he now lives in D.C. full-time so he can spend more time influencing the political process with his big $$$. What a "surprise".

    The one group of FedEx employees who were really smart in dealing with Smith were the pilots. After being jacked-around by upper management they took matters into their own hands and went union. And despite all his bluster about "selling the company if it went union" Smith and Co. had to negotiate with the pilots, who threatened to stop flying just before peak if their demands weren't met. In the end, they received an excellent compensation package, complete with signing bonuses.

    We would have the same power IF we organized. Just like UPS, you cannot just hire anyone off the street into a DOT position that has a fair amount of technical knowledge involved (PowerPad, DIAD etc) paired with mandatory drug-testing and security requirements. The threat of a strike, particularly around peak, would bring Fred to kis knees. When you're dealing with someone who only cares about money, you have to negotiate from a like-minded position. As it stands now, we've given away all of our power to an Napoleonic despot who has proven time and time again that he will abuse it.

    One question...WHERE ARE THE TEAMSTERS?
  11. disneyworld

    disneyworld Active Member

    Re: Future of FedEX

    Not only that-but parody too!!!!!!
  12. Coldworld

    Coldworld Well-Known Member

    But hasnt smith been quotted saying that he would fold up the whole business before he would be part of a union company. Maybe ups has some interest in purchasing fredex, then selling off some of the parts. People on here keep on saying that it would be an anti- trust issue...I dont believe so since both are worldwide companies and we are competing with every countries postal system including duetche post, among dozen others.
  13. MrFedEx

    MrFedEx Engorged Member

    I don't think UPS would ever purchase FedEx, even though they probably could with their huge cash reserves and overall financial clout. I also doubt if the government would allow it because it would almost be a monopoly situation. The Ground network would be a duplication of existing UPS structures, but the Express side might have some routes and facilities that UPS would be interested in having.
  14. Winger

    Winger Guest

    Just a correction for MrFedEx - Fred Smith was not "forced to negotiate" with the pilots because they threatened to strike just before peak. Fred warned the pilots that if they went on strike they would never come back to work. He set up contingency plans with commercial airlines and railroads. His letter to the pilots is now in textbooks in every business school in the country. The pilots not only backed down, but decertified their union and started their own in-house union. This was actually a great show of solidarity by the pilots who told their former union, "we want to be represented but we don't want you to ruin our company." I don't disagree with much that is contained on this board, but we don't need to "spin" stories to prove the point.
  15. MrFedEx

    MrFedEx Engorged Member

    Sorry Winger, but your info is a bit out of date. FedEx pilots are ALPA members, having abandoned their in-house union long ago because Fred was still managing to pull the strings. As far as contingency plans using railroads, I find that a bit hard to believe, since getting freight across the country by rail takes at least a couple of days, even via hotshot priority trains (ask UPS). Not exactly the prescription for an overnight or 2-day service. Using the commercial airlines wouldn't work either because there isn't enough belly capacity on passenger carriers to fly even a fraction of FedEx volume.
    Also, please cite the business texts that have the story of Fred's negotiations with the pilots....I'd like to read them.
  16. DeputyDip

    DeputyDip Backwoods Hillbilly

    Would be a little tough to fit a package container through the man door on a commercial airliner. Can you imagine having to roll one down the isle with all of those seats? Railroads....uh sure, well have your packages there just as soon as we drop of this load of coal at the power plant, and this load of gravel at the cement plant, and this load of corn at the mill, and this load of logs at the sawmill, and this load of scrap iron at the salvage yard, and this load benzene down at the chemical plant.
  17. barnyard

    barnyard KTM rider Staff Member

    Railroads would not be able to handle any more hotshots for FedEx because of their exploding volume. UPS has tried running faster hotshots with both BNSF and UP in the west with connects to NS and CSX in the east. The railroads determined that the increased speed of the hotshots delayed too many other trains to be profitable (story in Trains magazine a yearish ago.) UPS has been opening up more team driving lanes because the railroads cannot run the hotshots.

    The reality on the railroads, right now, is that they are moving about all the volume they can. It takes a long time and a lot of money to expand mainline capacity.

    Trains had a really interesting story about the UPS trains and how demanding UPS is and all that probably 5ish years ago. BNSF has trains named after UPS railroad managers (that's a pretty big deal.) It would be interesting to read an update on UPS/railroad relations.

    Tom B
  18. MrFedEx

    MrFedEx Engorged Member

    I read the article in TRAINS magazine too...very interesting. UPS has been playing-off UP and BNSF against each other for so long that the railroads are starting to wise-up and stop undercutting each other just to get the business. Why do it if it isn't profitable? You also mentioned the capacity issue, and putting other lower-priority trains into sidings to wait for UPS hotshots screws-up the traffic flow. Perhaps UPS would be willing to pay higher rates to avoid more trucking, which is almost always more costly than rail.
  19. barnyard

    barnyard KTM rider Staff Member

    I thought the jist of the article was that UPS would have to pay rates high enough to justify 20-30 late trains on UP, which was why UP gave up the business. I remember 24 or 28 trains that were directly affected, plus trains that were held at terminals, which adds to congestion that many terminals may not be able to handle (check out "The Texas Meltdown" in Trains.)

    I really do not think that many people outside of the railroads realize how full they are.

    Right now, even though BNSF gave up some volume to UP, UPS is still BNSF largest customer. I thought I read in another article, that before the BN-SF merger, UPS paid for "their" trains and then sold the excess capacity. So, 10-15 years ago, if you saw a train with UPS trailers, any non UPS trailers were generating revenue for UPS. I'm getting old, so my memory might be off, but I am pretty sure I read that article....

    UPS gets their way with railroads, up to a point.

    Last edited: Apr 21, 2008
  20. MemphisFedexer

    MemphisFedexer New Member

    If Fred could run the company without pilots(or couriers, for that matter) he would already be doing it. We would be toast if the pilots walked. If other groups went union and Fred tried to shut down, the owners of the other 94% of the stock that he doesn't own would boot him. They wouldn't back his disdain for unions by flushing billions of their dollars down the crapper.