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jmduke

Private Equity Play for FedEx?

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I'm surprised these little nuggets in the financial magazine recently haven't generated much buzz on here. I reckon it all started with Barron's analysis that FedEx could be considered a takeover target by a private equity firm looking for a prestigious brand name. While this may generate some short-term interest in the stock, I think most analysts realized a few days later this would be about the worst thing that could happen to FedEx. Private equity firms look at the $3.5 billion in capital investments FedEx plans to make this year and sees that as potential profit if they got their hands on the company. FedEx always thinks very long term, much more so than a company like Blackstone or Cerberus, and a PE firm's unwillingness to invest in the company would result in short term gain for them and bleed FedEx dry in the long run. Plus, Fred Smith is still such a controlling authority who could have taken his billions and walked years ago. He doesn't seem like the type of chairman/CEO who wants to part with "his" company on these terms.

CA: http://www.commercialappeal.com/mca/busine...5621959,00.html

MBJ: http://www.bizjournals.com/memphis/stories...html?from_rss=1

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I agree with you jduke, I have my doubt that a private equity takeover by one of these firms would be good for Fed Ex in the long term. Many private takeover bids lately, Chrysler for example, seem more designed for a short term turn around of a firm by restructuring. I don't think I have heard any credible need for FedEx to be restructured so I would be suprised to see a takeover bid actually occur. Fred Smith seems to know whats he's doing, heck he advises state and local governments of efficiences.

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