FedEx Corporation (FDX, Financial) has announced a significant strategic move with the decision to pursue a full separation of its FedEx Freight business through the capital markets. This initiative aims to create a new publicly traded company, enhancing the focus and operational efficiency of both entities.
On January 7, 2025, FedEx revealed the commencement of offers to exchange any and all of its outstanding senior notes of certain series for new notes to be issued by FedEx. This move is part of the broader strategy to facilitate the separation of the FedEx Freight business. Concurrently, FedEx is soliciting consents from eligible holders of each series of existing notes to adopt proposed amendments to the indentures governing these notes. These amendments aim to provide for the automatic and unconditional release and discharge of the guarantee of FedEx Freight, Inc. once it ceases to be a subsidiary of FedEx.
The separation, as defined in the report, involves the sale, exchange, transfer, distribution, or other disposition of assets and/or capital stock of one or more subsidiaries of FedEx, resulting in the creation of a new publicly traded company. The exchange offers and consent solicitations are being conducted under the terms and conditions outlined in a confidential offering memorandum and consent solicitation statement dated January 7, 2025.
It is important to note that the new notes offered in the exchange have not been registered under the Securities Act of 1933 or any state or foreign securities laws. Therefore, they may not be offered or sold in the United States or to any U.S. persons except under an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
This strategic separation is expected to unlock value for shareholders and provide both FedEx and the new entity with the flexibility to pursue growth opportunities independently.
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