FDXBUSCAPT

FedEx: A Likely Buyout Target - Barron's

Posted on Jul 9th, 2007 with stocks: FDX


Eli Hoffmann submits: Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:
Absolutely, Positively No One's Safe by Michael Santoli
Summary: Steady growth numbers and exposure to the relatively stable ground and freight transport sector are two reasons shipping giant FedEx (FDX) could be attractive to potential buyers, says Streetwise editor Michael Santoli. 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 (FDC), Alltel (AT), Harrah's Entertainment (HET) and Hilton Hotels (HLT) 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. Rival United Parcel Service (UPS) faces another potential strike next year.

Purpledriver

Any MBAs out there want to take a stab at the results of something like this actually happening?

machz990

FDX stock spiked on the rumor and subsequently retreated. In my opinion it is speculative reporting.

ABK MAN

We ain't gonna be bought out . . .

JetJocF14

SO LET IT BE WRITTEN........... SO LET IT BE DONE!

Falconjet

I reckon so.

tomgoodman

I suspect that more money has been made (and lost) on rumors of buyouts than on actual buyouts. Speculators like to use the media.