FedEx Corporation (NYSE:FDX) Plans Spin-Off

FedEx Corporation shares surged over 9% to $299.5 in extended trading following the announcement of a spin-off of its less-than-truckload freight division.

Spin-Off Details

FedEx aims to execute the spinoff via a capital markets transaction, resulting in two independent, industry-leading public companies. Both FedEx and FedEx Freight will focus on their growth strategies post-separation.

CEO Raj Subramaniam stated, "This is the right time to pursue a separation as we respond to the unique dynamics of the LTL market." The separation is expected to be tax-efficient for FedEx shareholders and is projected to be completed within the next 18 months.

Financial Performance

In its second-quarter earnings, FedEx reported an earnings per share of $4.05, meeting Wall Street estimates and slightly up from $3.99 a year ago. However, the company’s revenue totaled $22 billion, which was below the expected consensus of $22.17 billion.

Guidance for fiscal 2025 adjusted earnings per share is set between $19.00 and $20.00, compared to the analyst consensus of $19.75.

FedEx, headquartered in Memphis, is navigating a complex restructuring involving significant cost-cutting efforts, with permanent cost reductions totaling $2.2 billion from the DRIVE transformation program.

Shares of rival UPS also rose over 1%.