FedEx has pulled out of an expensive planned deal to buy one of India’s largest road expresscompanies due to differences over the acquisition price, according to an unconfirmed newspaper
report. The deal could have been worth between $450 million and $500 million.The US integrator, which acquired its Indian air express partner Pafex earlier this year for$30 million, had been in advanced talks to buy Safe Express, the Economic Times newspaper said,citing unnamed sources. The report has not been confirmed by the companies involved. FedEx declinedto comment.
But FedEx turned down a proposed sale price of 20 billion rupees ($495 million), and wasprepared to pay at most 18 billion rupees ($445 million) for Safe Express, which had revenues of$81 million (+10%) in the year ending March 2007, the newspaper reported.
Safe Express owner Pawan Jain has also been in talks with private equity investors about apotential holding in the company, according to the Economic Times. One financial investor had beenready to buy a 10% stake for 2 billion rupees, it said.
According to the Safe Express website, the road transport company has a fleet of over 3,000vehicles, a network of 39 hubs and branches, and operates some 1,000 linehaul routes connecting 525destinations across India. It claims to deliver more than 2.5 million packages a month.
The failed acquisition is a setback to FedEx’s hopes of gaining a stronger position in thedomestic Indian market, the Economic Times commented. Competition is increasing in the boomingIndian express and freight market, and both integrators such as DHL and TNT as well as domesticoperators are investing strongly in air and road express transportation, and added-value logisticsservices.
