Updated from 10:03 a.m. EST
, the world's largest express mail service, announced Monday that it would acquire regional freight carrier
in a stock and cash deal valued at $1.2 billion.
Under the terms of the agreement, Memphis, Tenn.-based FedEx will exchange $28.13 in cash or FedEx stock per share of Harrison, Ark.-based American Freightways -- a nearly 61% premium based on Friday's closing price. The acquisition will expand FedEx's next-day regional freight service coverage in the Midwest, South, and Northeast, and form one of the country's largest ground freight units when combined with FedEx subsidiary
, which has its strongest presence in the West.
"This acquisition is a perfect strategic fit that will give FedEx a unique competitive advantage, generating incremental volume and revenue that neither business could capture as a standalone," said Frederick W. Smith, chairman, president and chief executive of FedEx, in a statement Monday.
American Freightways finished up $10.13, or 58%, at $27.63. FedEx finished up 10 cents at $45.27.