MEMPHIS, Tenn. – The FedEx Corp. (FDX) announced Monday it is paying $120 million for Parcel Direct (search), a company that consolidates shipping for catalogue and Internet retailers.
Parcel Direct will become a subsidiary of FedEx Ground, the shipping giant's trucking company.
Primary business for the new subsidiary is expected to come from companies selling their products over the Internet or through catalog retailers for home shipment to consumers.
"It's a specially designed network for slower moving, lightweight packages," said Jess Bunn, a FedEx spokesman.
FedEx said it will pay cash for Parcel Direct, which is now a division of Quad/Graphics (search), with the sale completed in the second financial quarter.
Parcel Direct, based in New Berlin, Wis., has 450 employees and revenues of about $250 million.
Packages handled by Parcel Direct are taken to 12 company locations around the country where they are sorted and consolidated and then taken to the U.S. Postal Service for final delivery.
FedEx said the acquisition is not expected to have a material effect on 2005 financial results.
The acquisition is the second announced by FedEx since December. The company completed its $2.4 billion purchase of Kinko's Inc (search) in February, putting FedEx operations in Kinko's 1,100 stores across the country and giving the shipping company better access to the small office/home office market.
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