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FedEx: A Likely Buyout Target - Barron's
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<blockquote data-quote="Channahon" data-source="post: 218584" data-attributes="member: 7666"><p><strong>Summary: </strong>Steady growth numbers and exposure to the relatively stable ground and freight transport sector are two reasons shipping giant <strong>FedEx (<u><span style="color: #0000ff">FDX</span></u>)</strong> could be attractive to potential buyers, says <em>Streetwise</em> editor <strong>Michael Santoli</strong>. With an enterprise value of $35 billion ($34b market cap and $1b debt) it's big, but recent buyouts of well-run large growth companies like First Data (<u><span style="color: #0000ff">FDC</span></u>), Alltel (<u><span style="color: #0000ff">AT</span></u>), Harrah's Entertainment (<u><span style="color: #0000ff">HET</span></u>) and Hilton Hotels (<u><span style="color: #0000ff">HLT</span></u>) suggest LBO firms are attracted to sturdy large-cap growth companies of its ilk. Recent hesitance in the LBO-debt market would not likely be an issue in a FedEx buyout considering its real assets, including 700 aircraft and 44,000 trucks. A full 70% of FedEx's $3.5 billion planned capital spending in 2007 is growth oriented. And FedEx's underperforming Kinko's unit is attractive to fix-it-up oriented private equity buyers. Even without a deal, shares are reasonable at 15x 2008e earnings.</p><p></p><p><strong>Rival United Parcel Service (</strong><u><span style="color: #0000ff"><strong>UPS</strong></span></u><strong>) faces another potential strike next year</strong>.</p><p></p><p>It's a shame the only thing mentioned about UPS is a potential strike. What does that have anything to do with a FedEx buyout? Subliminal suggestion to get more volume for FedEx?</p></blockquote><p></p>
[QUOTE="Channahon, post: 218584, member: 7666"] [B]Summary: [/B]Steady growth numbers and exposure to the relatively stable ground and freight transport sector are two reasons shipping giant [B]FedEx ([U][COLOR=#0000ff]FDX[/COLOR][/U])[/B] could be attractive to potential buyers, says [I]Streetwise[/I] editor [B]Michael Santoli[/B]. With an enterprise value of $35 billion ($34b market cap and $1b debt) it's big, but recent buyouts of well-run large growth companies like First Data ([U][COLOR=#0000ff]FDC[/COLOR][/U]), Alltel ([U][COLOR=#0000ff]AT[/COLOR][/U]), Harrah's Entertainment ([U][COLOR=#0000ff]HET[/COLOR][/U]) and Hilton Hotels ([U][COLOR=#0000ff]HLT[/COLOR][/U]) suggest LBO firms are attracted to sturdy large-cap growth companies of its ilk. Recent hesitance in the LBO-debt market would not likely be an issue in a FedEx buyout considering its real assets, including 700 aircraft and 44,000 trucks. A full 70% of FedEx's $3.5 billion planned capital spending in 2007 is growth oriented. And FedEx's underperforming Kinko's unit is attractive to fix-it-up oriented private equity buyers. Even without a deal, shares are reasonable at 15x 2008e earnings. [B]Rival United Parcel Service ([/B][U][COLOR=#0000ff][B]UPS[/B][/COLOR][/U][B]) faces another potential strike next year[/B]. It's a shame the only thing mentioned about UPS is a potential strike. What does that have anything to do with a FedEx buyout? Subliminal suggestion to get more volume for FedEx? [/QUOTE]
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