FedEx Watkins Rumor Mill
May 25, 2006 by Splatty
Filed under Integrators
I just read a Reuters report stating that Fedex is rumored to be close to purchasing Florida based LTL carrier Watkins lines for $1 billion. Of course both Fedex and Watkins are taking the no comment stance on the reports. This would be a huge acquisition for Fedex and would signifigantly bolster their LTL network. In my dealings with LTL customers, I have received very favorable comments regarding Watkins reliability and overall service levels. It will be interesting to see how this shakes out over the next couple of weeks.
Analysts estimate Watkins generated just over $1 billion in revenue in 2005. Like FedEx, Watkins is a non-union carrier. As a so-called less-than-truckload (LTL) shipper, it consolidates smaller loads into a single truck shipment.
FedEx already has its own LTL unit, FedEx Freight, which it built out of three trucking company acquisitions between 1998 and 2001. The unit has high margins – 11 percent in fiscal year 2005, compared with 8.4 percent for the whole group – and revenue of $3.2 billion in 2005.
n a research note, BB&T analysts John Barnes and Adam Thalhimer wrote: “While we don’t generally like to comment on speculative events, this particular rumor has been reported in the press in recent days, perhaps supporting its credibility.”
“We like the sound of this potential deal,” they wrote, adding that Watkins’ experience with long-haul LTL service could augment FedEx’s regional LTL business. Source – Reuters
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