FedEx Buys Out Local Franchisee For $30 mn

Business Standard:

After 22 years of operating in India through a franchisee, FedEx Corporation, the world’s largest express transportation company, has decided to acquire Prakash Air Freight Pvt Ltd, its sole franchisee in the country, for $30 million in cash.

This marks the direct entry of the $33 billion FedEx, which has nearly 275,000 employees and 670 aircraft worldwide.

Mumbai-based Prakash Air Freight Pvt Ltd, a privately held company, is one of the largest domestic companies in the industry with 384 offices serving nearly 4,400 destinations.

The two key promoters of Prakash Air Freight Pvt Ltd, Rajan K Manchanda and Vijay Narang, could not be reached for comments on their decision to cash out.

FedEx applied to the Foreign Investment Promotion Board about two weeks ago for permission to undertake the acquisition.

“This is the next logical step in the ongoing development of our Indian business,� said Robert Elliott, president of FedEx Express (Europe, West Asia, Africa and the Indian subcontinent).

Sources said the deal, subject to the usual mandatory approvals, could be concluded in two weeks.

JP Morgan acted as financial adviser to FedEx.