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FedEx Acquisition of Kinko’s Case Solution & Answer

FedEx Acquisition of Kinko’s  Case Solution

All independent stores were consolidated into a corporate entity after the company was taken over by Clayton, Dubilier & Rice (CD&R) who acquired 75% of holdings. The business became centralized and the policies and procedures were formed and imposed at all stores. The company’s headquarter transferred to Dallas, Texas from Ventura, California in 2001.

Under the management of Gary Kusin, as CEO, Kinko’s operated with the target to become a sustainable business, attractive to the investors, and private equity. One of the strategies of the company was to cut costs and limit its spending, so that the company could become financially sound. The company grew its business with the increasing number of corporate clients. The company gained operating efficiency and started making good profits, which made it a suitable acquisition target with high business prospect. Its operating margin went up to 8% in the year 2003.

Evaluation of FedEx Acquisition of Kinko’s

FedEx is a leading package and courier delivery services provider company. It is a multinational company based in the United States. The head quarter of the company is in Memphis, Tennessee, United States. Frederick W. Smith is the founder and CEO of the company. The services of the company can be categorized into Package services, Freight and shipment services, and return shipment services.

  • FedEx Custom Critical
  • FedEx Trade Networks
  • FedEx Cross Border
  • FedEx Supply Chain

FedEx has adopted the acquisition strategy to grow and expand its business. Before Kinko’s, the company has already acquired Gelco Express International, Tiger International, Caliber System, Tower group international, and American Freight ways Corporation. Through these acquisitions, the company expanded globally and increased its portfolio of services.

FedEx Acquired Kinko’s along with its 1200 retail outlet locations, at the acquisition price of $2.4 billion in the first quarter of 2004. The deal was a cash transaction; the acquisition motive of FedEx was to increase the retail business network worldwide. The consolidated operations will result in many synergies. The deal agreement also lets the current management and employees of ‘Kinko’s’ to continue their services in the new consolidated firm.

Kinko’s acquisition was unusual from the all previous acquisitions. The company was in pursuance to expand its retail store network, while expanding its services for business solutions. Kinko’s retail chain stores with 1200 retail outlets and sustainable business was an appropriate target for this purpose. The company also wants to gain competitiveness, since a similar acquisition was made by United Parcel Services (UPS) to gain access to Mail Boxes franchise stores.

FedEx held a practical and proactive approach. It wants Kinko’s business to integrate with the core business of the company and to start providing services at all the retail stores as soon as possible. The company made an integration team. Following are the objectives of the integration team:

All the retail stores have to be re branded to FedEx and the services offered at each retail store should include FedEx services as well. “FedEx Kinko’s” was selected as the new brand name.

All the employees of Kinko’s have to be trained, so that they can provide competent services, since the array of services has been increased.

The company retained the existing workforce of Kinko’s. About 2000 employees were allowed continue to operate the stores. Kusin had been retained as the CEO of Kinko’s operations. He was also promoted to be the member of the strategic management committee of FedEx. …………………….

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