Happy birthday, FedEx Freight; at least that's what it felt like Monday as FedEx Corp. completed the spin-off of its freight business and officially launched FedEx Freight Holding Company Inc. as an independent, publicly traded entity focused entirely on the North American less-than-truckload market.
FedEx Corp. (CCJ Top 250, No 1) continues to trade on the NYSE under its existing ticker symbol, FDX.
Shares of the new company also started trading on the New York Stock Exchange Monday under the ticker symbol FDXF and joined major equity indices, including the S&P 500 and the Dow Jones Transportation Average. The stock opened trading at $163.88 per share and closed down about 6% just shy of $150 per share.
Monday was a fairly muted day overall for publicly traded LTL carries, with Old Dominion (+1.5%), Saia (+2%), ArcBest (+3%), and XPO (+3.25%) posting small gains.
John Smith, president and chief executive officer of FedEx Freight, framed the split as a move that allows the logistics giant's trucking arm to sharpen its operational strategy.
"Today begins the next chapter for the new FedEx Freight," Smith said in a statement, noting that the business launches as the largest pure-play less-than-truckload carrier in North America. "We move forward as an independent company with a sharpened focus and disciplined strategy to build on our competitive advantages and accelerate profitable growth."
Smith added that the company plans to leverage its network of more than 26,000 service center doors to target high-potential industry verticals and boost stockholder value.
The separation was finalized through a pro rata distribution of 80.1% of FedEx Freight’s outstanding common stock to existing FedEx Corp. shareholders. Investors received one share of FedEx Freight stock for every two shares of FedEx stock held as of the close of business on May 15. Cash will be issued in place of fractional shares.
FedEx Corp. retained a 19.9% stake in the newly independent trucking company. The parent firm plans to divest those remaining shares within the next 24 months. According to the company, that disposal will occur through debt-repayment exchanges with creditors, stockholder dividends, or stock swaps for outstanding FedEx common shares.
