Why Amazon should buy FEDEX

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It’s the ideal next step for a company that needs to expand its logistics and transportation business.  The synergies are crazy.

Fedex is a carrier with a reputable name. It is a carrier that used to be at the forefront of innovation. It also has huge coverage – an area where Amazon is still be building ground. FedEx also has established systems and processes that align with Amazon’s. 

Then there’s the numbers.  FedEx generates c.$70B in sales but has recently been hit with issues such as low profitability and changes within the organization.   Their profits are down, they are lacking when it comes to innovation and expansion, and their stock price is good value right now. 

But could Amazon afford to buy FedEx?  FedEx shares are sitting around the $158 mark.  While it will take a bit more cash. BUT the synergy that they will create will most certainly crush the market.  Amazon leaping into the transportation business so fast it would give it control of the market so quickly competitors would find it hard to respond.

Amazon buying FedEx also makes sense for share holders.  The value of AMAZON would certainly push so far past the $TRILLION.  It could also do it while avoiding any investigations by the SEC.  Why? Because it’s not their core business any more than Whole Foods.  BUT it would certainly close many gaps in Amazon’s business.  It would create a Powerhouse that would control the industry for many decades to come. 

And what about UPS – or another carrier?

It’s possible.  But Amazon could buy FedEx much more cheaply than UPS.  UPS recently declared that Amazon represents about 11.6 of annual revenues which is HUGE.  For a public company such as UPS for the first time to disclose such dependency its incredible. 

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