Fedex Merges with Kinkos
Introduction
In 2003, the announcement was made of a merger between FedEx Corporation and Kinko’s, Inc. There are multiple reasons why corporate decision makers consider mergers, “the potential efficiency benefits from mergers and acquisitions include both operating and managerial efficiencies,” (Pautlar, 2003, p. 122). “These mergers and acquisitions are aimed at increasing growth, enhancing existing capabilities and developing new markets” and as a strategic consideration they can “generate cost efficiency through economies of scale, can enhance revenue through gains in market share and can even generate tax benefits,” (Saini & Singla, 2012, p. 284). In this paper, the merger between FedEx and Kinko’s is examined through an analysis of the financial ratios and environmental factors impacting them.
Background
Leading up to the merger, FedEx was known as a transportation and logistics business for shipping needs, with overnight shipments being their core strength in the marketplace. Operating globally, FedEx was the largest organization of its kind. In the U.S., only the United Parcel Service (UPS) had any competitive edge on FedEx, and that was because of the UPS stores where customers could buy all of their shipping supplies and send packages from very conveniently placed storefronts. Kinko’s, Inc. was the office supply store with an emphasis on document printing and packaging. Kinko’s entered the market in California with a focus on college students, however soon became a premier servicer of small and home based businesses. The company had a very loyal customer base with no single competitor, but instead a knack for competing against regional divisions of larger companies due to its decentralized operations. Being privately owned, it is difficult to determine the actual financial standing of the organization at the time of the merger, as financial statements were not made accessible to the public. However, some obvious benefits FedEx would
In 2003, the announcement was made of a merger between FedEx Corporation and Kinko’s, Inc. There are multiple reasons why corporate decision makers consider mergers, “the potential efficiency benefits from mergers and acquisitions include both operating and managerial efficiencies,” (Pautlar, 2003, p. 122). “These mergers and acquisitions are aimed at increasing growth, enhancing existing capabilities and developing new markets” and as a strategic consideration they can “generate cost efficiency through economies of scale, can enhance revenue through gains in market share and can even generate tax benefits,” (Saini & Singla, 2012, p. 284). In this paper, the merger between FedEx and Kinko’s is examined through an analysis of the financial ratios and environmental factors impacting them.
Background
Leading up to the merger, FedEx was known as a transportation and logistics business for shipping needs, with overnight shipments being their core strength in the marketplace. Operating globally, FedEx was the largest organization of its kind. In the U.S., only the United Parcel Service (UPS) had any competitive edge on FedEx, and that was because of the UPS stores where customers could buy all of their shipping supplies and send packages from very conveniently placed storefronts. Kinko’s, Inc. was the office supply store with an emphasis on document printing and packaging. Kinko’s entered the market in California with a focus on college students, however soon became a premier servicer of small and home based businesses. The company had a very loyal customer base with no single competitor, but instead a knack for competing against regional divisions of larger companies due to its decentralized operations. Being privately owned, it is difficult to determine the actual financial standing of the organization at the time of the merger, as financial statements were not made accessible to the public. However, some obvious benefits FedEx would