Investing.com — FedEx Corporation (NYSE:FDX) shares soared more than 9% at $299.5 in extended trading after the company announced plans to spin off its less-than-truckload freight division.
FedEx intends to carry out the spinoff through a capital markets transaction, creating two independent, industry-leading public companies.
As two industry-leading public companies, FedEx and FedEx Freight will continue to pursue their growth strategies, the company added.
“This is the right time to pursue a separation as we respond to the unique dynamics of the LTL market,” said CEO Raj Subramaniam.
The company stated the separation is expected to be executed in a tax-efficient manner for FedEx stockholders and completed within the next 18 months.
The parcel delivery giant reported second-quarter earnings of $4.05 per share, matching Wall Street estimates, and up slightly from $3.99 per share a year ago.
However, revenue for the quarter totalled $22 billion, falling short of the consensus estimate of $22.17 billion.
FedEx provided guidance for fiscal 2025 adjusted earnings per share in the range of $19.00 to $20.00, compared with the analyst consensus of $19.75.
The Memphis-based delivery company has been going through a complex restructuring, which involves aggressive cost cutting. It said the permanent cost reductions from the DRIVE transformation program was of $2.2 billion.
Shares of rival UPS were also up more than 1%.