Amazon buying Fedex? Analysts say it’s possible

Amazon buying Fedex makes more sense than growing its own delivery network to Fedex’s level, if the e-commerce powerhouse is serious about the logistics business, analysts at an investment firm argued last week.

And Fedex CFO Alan Graf Jr. agrees if Amazon wanted to be in Fedex’s business, it would be cheaper just to buy the Memphis logistics giant outright, according to Anthony Chukumba and Rick Paterson, both Loop Capital Markets analysts. They continued to make their case for why the acquisition could happen in a note last week.

“Amazon could make an accretive acquisition of the best global network for a fraction of the cost of building it themselves (we recently attended a meeting at Fedex headquarters at which the CFO made exactly the same point),” they said.

Chukumba and Paterson added Fedex is currently an “inexpensive” acquisition — Fedex share prices have climbed of late but are nowhere near their 2018 highs — and if Amazon wants to have a true delivery business, “’buying’ is a much more attractive option than ‘building.’”

Fedex declined to comment on the matter.

Is Amazon moving into Fedex territory?

Amazon has been finding more ways to move packages with less outside help.

Amazon wants to “poach” Fedex and UPS customers via a new home delivery service, the Wall Street Journal reported , and the company continues to bolster its Amazon Air fleet and contractor program for last-mile shipments.

Fedex downplays these Amazon delivery programs as a threat, contending Amazon’s growing logistics operations are used to move parcels within its own network above all else. Executives for the Memphis company have also said Amazon’s distribution network has a long, long way to go to even rival Fedex’s.

Chukumba and Paterson acknowledge Fedex’s counter to the Amazon question, but also say Amazon’s burgeoning delivery fleet should be able to support some business beyond its own network.

“Why not sell this extra space to third parties to help cover fuel and fixed costs?” they said.

Chukumba and Paterson did elaborate Loop Capital doesn’t think an acquisition “is a high probability in the near term (and possibly ever),” given Amazon’s other priorities like global expansion.