took the next step in its plan to become a one-stop shipping center for cataloguers and etailers, snapping up Parcel Direct, a shipment consolidator, for $120 million in cash.
Parcel Direct, a unit of Quad/Graphics, makes it more efficient and cheaper for retailers and manufacturers to ship lightweight goods that are not time-sensitive, sorting the packages at its 12 hubs scattered throughout the U.S. then passing them along for final delivery via the U.S. Postal Service.
FedEx said Parcel Direct had $250 million in 2003 gross revenue providing services for a client base that includes retailer
and the Spiegel catalogue.
"The critical thing here is that FedEx now offers a one stop shop for e-tail and catalogue companies. We have a broad range of solutions under one roof," the company said. "Also, the big difference here is that we're buying an established network that was specially created to take advantage of this type of service."
In reaction to the news, shares of FedEx dipped 23 cents, or 0.3%, to $77.91.
The company expects the deal to close near the end of the calendar year, adding it will have no material impact on fiscal 2005 financial results. When the merger closes, Parcel Direct will become part of FedEx Ground.
The acquisition of Parcel Direct is another step in FedEx's plan to expand its suite of services. At the end of 2003,
the company bought Kinko's for $2.4 billion and quickly expanded its shipping services into the copy center's 1,100 stores nationwide. The Kinko's acquisition helped FedEx stay competitive with rival
, which had already rolled out its services with its acquisition of Mail Boxes, Etc., which were rebranded The UPS Store.