[PoopyTheJ]

I work there so I thught it was news.
From Fox News
FedEx to Buy Kinko's for $2.4 Billion
MEMPHIS, Tenn. — Shipping giant FedEx Corp. (FDX) on Tuesday said it agreed to buy copy center operator Kinko's for $2.4 billion in cash, to win more small-business customers in the face of competition from United Parcel Service Inc (UPS).

The purchase from private equity firm Clayton, Dubilier & Rice Inc. (search) will allow FedEx, the world's largest overnight package deliverer, to offer shipping services in all 1,200 Kinko's stores. FedEx, which has been Kinko's shipping provider since 1988, now operates counters in 134 Kinko's stores.

"The purchase allows each company to expand in the other's areas of strength," said Donald Broughton, transportation analyst at A.G. Edwards in St. Louis. "It should be a good marriage."

FedEx's purchase follows UPS's March 2001 acquisition of shipping and copy chain Mail Boxes Etc. (search) in a move to better target consumers and small businesses. UPS has expanded the chain to more than 4,000 stores and is in the process of rebranding it.

FedEx shares fell nearly 2 percent to $68.59 in afternoon trade, down $1.35.

With about $2 billion in annual revenue, Kinko's has grown from about 127 outlets when Clayton Dubilier first invested $220 million in 1996. Its stores are company-owned, in contrast to the mostly-franchised Mail Boxes.

While about 30 percent of Kinko's business comes from walk-in customers, the company is actively targeting the corporate "outsourcing" market, listing 370 of the top 500 U.S. corporations as customers, particularly aiming for a growing market for digital document services.

"This is a defensive move following the UPS acquisition of Mail Boxes, but a good offensive move to get more share of the ground market," said Jack Liebau, president of Liebau Asset Management in Pasadena, Calif., which holds FedEx shares. He predicted FedEx will "out-execute" UPS because it will own and control Kinko's, unlike UPS' franchised retail operation.

Memphis, Tenn.-based FedEx said the purchase should not materially affect fiscal 2004 earnings but should boost earnings in fiscal 2005, which begins on June 1, 2004. It said it expects the purchase to close in the first quarter of 2004.

New York-based Clayton Dubilier, which boasts former General Electric Co. (GE) boss Jack Welch as an adviser, invested $550 million in Kinko's in several installments, while J.P. Morgan Partners put up about $150 million for a nearly 20 percent stake in 2001, according to David Wasserman, partner in the firm.

Wasserman said that Clayton Dubilier expected to hold an initial public offering for Kinko's late next year when it was approached by FedEx in November.

"We always thought Kinko's would be a terrific public company, but this was an attractive deal," he said.

Private equity firms typically aim to buy, build and sell businesses in three to seven years and generate above-market returns for their pension fund investors.

Wasserman wouldn't discuss what the firm generated on the deal, but one person close to the transaction said it would get proceeds of about $1 billion from the Kinko's exit. That would be a welcome cash infusion after at least one of its portfolio companies, Fairchild Dornier, was forced to liquidate.

The acquisition comes as Kinko's makes a big push for small-to-medium sized businesses, competing head on with UPS.

Michael Glenn, FedEx executive vice president for market development, said as more businesses transmit documents digitally, they can store them with Kinko's and access them by computer.

FedEx also said Kinko's plans to significantly expand its non-U.S. presence, where it has about 110 locations in Canada and seven other countries.

FedEx said it expects Kinko's more than 20,000 employees will become FedEx employees. It also said Kinko's management is expected to remain in place and that the company's headquarters will remain in Dallas.

Kinko's was founded in 1970 when Paul Orfalea, a recent college graduate, borrowed money to open a photocopy shop, in a building that also housed a taco stand, in Isla Vista, California. He called it "Kinko's" after the nickname his college friends gave him because of his curly, reddish hair.

Merrill Lynch & Co. advised FedEx in the transaction, while Goldman Sachs & Co. and J.P. Morgan advised Kinko's.