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DHL TO ACQUIRE GROUND OPERATIONS OF AIRBORNE, INC.=09
<http://www.airborne.com/images/blank.gif> =09
<http://www.airborne.com/images/blank.gif> SEATTLE, WA AND BRUSSELS,
BELGIUM -- March 25, 2003=09
<http://www.airborne.com/images/blank.gif> =09
DHL TO ACQUIRE GROUND OPERATIONS OF AIRBORNE, INC. TO CREATE=20
STRONGER THIRD COMPETITOR IN U.S. EXPRESS DELIVERY MARKET =20
=20
AIRBORNE AIRLINE OPERATIONS TO BECOME=20
INDEPENDENT PUBLIC COMPANY, ABX AIR, INC.=20
=20
AIRBORNE SHAREHOLDERS TO RECEIVE $21.25 PER SHARE IN CASH=20
AND FULL OWNERSHIP OF ABX AIR, INC.=20
=20
COMBINATION EXPECTED TO BRING INTENSIFIED COMPETITION AND IMPROVED =
SERVICE
TO A BROADER RANGE OF CUSTOMERS=20
________________________________________________________________=20
=20
Seattle, Washington and Brussels, Belgium, March 25, 2003 - Airborne, =
Inc.
(NYSE: ABF) and DHL announced today that they have entered into a =
definitive
merger agreement that will create a stronger third competitor in the =
U.S.
express delivery market and bring the benefits of intensified =
competition
and enhanced service to millions of small- and medium-sized businesses =
that
purchase expedited door-to-door delivery of small packages and =
documents.=20
=20
Under the terms of the agreement, DHL will acquire Airborne's ground
operations (1) for $21.25 per share in cash, or a total equity value of
approximately $1.05 billion. Upon conclusion of the acquisition, =
Airborne's
air operations will be separated from its ground operations and will =
become
an independent public company, called ABX Air, Inc. ("ABX Air"). ABX Air
will be wholly owned by Airborne's current shareholders, who will each
receive one share of ABX Air for every Airborne share they hold. =20
=20
"The UPS/FedEx duopoly has a 79%(2) share of the U.S. express delivery
market, and the combination of DHL and Airborne will enable us to create =
a
much stronger competitor, which will benefit a broader range of express
delivery customers," said Carl Donaway, Chairman and CEO of Airborne, =
who
will become the CEO of the enlarged DHL business in the U.S. "In the =
markets
we compete in today, made up primarily of large, corporate accounts,
Airborne's price levels are substantially lower than our competitors. =
The
expanded DHL business will have the capital and resources to leverage =
this
value into the small to mid-sized marketplace. =20
=20
"This is a pro-competitive transaction that has compelling benefits for
shareholders, customers, and employees," continued Donaway. "Although
Airborne has been adjusting to a dynamic and changing marketplace, this
merger will bring the company to another level of competitiveness in an
industry that badly needs more competition. We will be able to provide
better value to customers today while investing in expanded service, new
products and innovative technology in the future."=20
=20
"This combination will strengthen DHL's presence in the U.S., and our =
global
presence will bring significant benefits to Airborne customers," said =
Uwe
Doerken, CEO of DHL Worldwide. "We see great opportunity for DHL to =
build on
the capabilities of the new combined company in the U.S. market, =
especially
in the under-served small- and medium-sized business segments, and we =
are
prepared to make a substantial long-term marketing investment to build a
strong competitor able to provide increased value for U.S. customers."=20
=20
Airborne is the third largest air overnight parcel carrier in the United
States, with an 18.8%(2) market share in the air overnight category,
delivering approximately 356 million domestic parcels in 2002. DHL has =
the
world's most extensive international parcel delivery network, with =
service
to 120,000 destinations in more than 220 countries worldwide. Although =
DHL
has the leading market share in international express delivery outside =
the
U.S., it has less than a 2% share of the U.S. air overnight domestic =
market
today.=20
=20
The U.S. ground operations of Airborne and DHL will operate under the =
DHL
brand. "We will seek to build on the best of both companies while
maintaining our focus on superior service, performance and productivity. =
The
combination of Airborne and DHL will result in increased opportunity for
employees of both companies because the combined U.S. operations will be
able to compete more effectively and pursue a more aggressive growth
strategy," said Donaway.=20
=20
The transaction, which is subject to shareholder and regulatory =
approvals,
is expected to be completed during the summer of 2003. =20
=20
ABX Air will have its own Board of Directors, management, independent
auditor and SEC financial reporting requirements. The Chief Executive
Officer will be Joe Hete, who is currently the senior operating =
executive of
Airborne's airline operations. To ensure ABX Air continues to meet U.S.
citizenship requirements, its certificate of incorporation will include
standard mechanisms to prevent foreign entities from gaining a control
position, including share ownership limits and foreign owner share =
registry.
=20
On completion of the transaction, ABX Air and DHL will enter into
arms-length commercial agreements that will govern their relationship,
including an aircraft, crew, maintenance and insurance (ACMI) agreement
under which the new airline company will provide air service to DHL's =
ground
business. It will also provide these services to third parties.=20
=20
Goldman, Sachs & Co. is serving as financial advisor to Airborne and
O'Melveny & Myers is serving as legal advisor. Deutsche Bank is serving =
as
financial advisor to DHL and Simpson Thacher & Bartlett is serving as =
legal
advisor.=20
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