FedEx Announces Spinoff of Freight Trucking Division, Shares Jump 8%
FedEx announced Thursday that it is spinning off its freight trucking division, a move that has been expected for some time. The decision is expected to unlock up to $20 billion in shareholder value and allow the company to focus on its core delivery business.
Shares of the company jumped 8% in after-hours trading, adding $5 billion to its market capitalization. Analysts believe that separating the freight trucking business from the rest of FedEx will allow the company to improve its operations and grow its value.
FedEx Freight is the largest US provider of less-than-truckload services, with revenue falling 11% to $2.17 billion during the fiscal second quarter. However, company executives say that the unit has bottomed out and is expected to improve as the company cuts costs and improves efficiency.
The announcement comes as FedEx is working to restructure its operations to focus on its core delivery business. The company is also exploring the merger of its Express and Ground units to boost profits.
