- The Washington Times - Tuesday, December 30, 2003

Shipping giant FedEx Corp. agreed to buy copy shop chain Kinko’s for $2.4 billion in cash yesterday, in a deal the companies said would vastly expand FedEx’s retail presence and make Kinko’s “a one-stop back office” for small and midsize businesses.

“The FedEx and Kinko’s combination will substantially increase our retail presence worldwide and will enable both companies to take advantage of growth opportunities in the fast-moving digital economy,” said Frederick W. Smith, chairman, president and chief executive officer of FedEx Corp.

Memphis, Tenn.-based FedEx runs the world’s largest cargo airline, FedEx Express, as well as FedEx Ground trucking operations for business-to-business and home deliveries. Kinko’s is the leading provider of copying and other business services, has annual revenue of $2 billion and is fat with cash, FedEx said.

FedEx already has drop boxes at Kinko’s and full counter services at 134 stores. When the transaction is completed, FedEx will have full service at all Kinko’s stores.

FedEx said it was particularly impressed with Kinko’s growth in digital services and its place as an “office away from home” for traveling executives, offering computer access, meeting rooms and other such services.

“We currently are the ‘back office’ for hundreds of thousands of midsize businesses in copying, printing and computer services,” said Kinko’s Chief Executive Gary Kusin, who will remain in that position and report to Mr. Smith.

Joining FedEx will make Kinko’s “a one-stop back office,” he said.

Half of Kinko’s business comes from small to medium-size companies, but business from larger corporations has increased to 20 percent and is growing, Mr. Kusin said. The rest of Kinko’s business comes from walk-in customers.

Kinko’s has 1,200 locations, “including more than 110 stores in international markets where FedEx currently has a limited retail presence,” Mr. Smith said. FedEx plans to dramatically expand the number of Kinko’s stores overseas.

FedEx said the Kinko’s acquisition would begin to add to its bottom line this summer.

Shares of FedEx fell 94 cents, or 1.3 percent, to $69 on the New York Stock Exchange, and have increased 27 percent this year.

Atlanta-based UPS acquired Mail Boxes Etc. in 2001 and earlier this year announced plans to rename the 3,330 Mail Boxes Etc. franchises across the country the UPS Store.

Kinko’s, which will become the fourth operating company for FedEx, will maintain its Dallas headquarters. No decision has been made on whether Kinko’s will keep its company name, FedEx said.

The buyout firm of Clayton, Dubilier & Rice Inc. now owns 75 percent of Kinko’s. When the transaction is completed — which is expected in the first quarter of 2004 — FedEx will own 100 percent of Kinko’s.


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