Tiger International Will Be Purchased by Federal Express

MEMPHIS —  Federal Express Corp., the successful overnight package delivery group, said today it would buy Tiger International Inc., the world’s biggest air freight company, for $880 million to boost its international presence.

“The combination of Tiger’s international route authorities, highly efficient cargo fleet and strategically located airport facilities will enable Federal Express to accelerate the development of its global distribution network,” said Federal Express Chairman Federick Smith.

Under the merger agreement, Federal Express, which virtually invented the overnight delivery business and dominates it with more than a 50% share of the $6-billion industry, will to start its tender for all Tiger shares at $20.875 a share on Tuesday.

Flying Tigers, subsidiary of Los Angeles-based Tiger, delivers to 30,000 cities. The company was formed in 1945 and moves everything from cows to computers on a wide network of scheduled flights.

NYSE Shares Rise

Tiger shares rose $2.50 on the New York Stock Exchange to $19.375. The rise came on top of a $2.125 advance the previous day on news that the air freight company had been approached by another potential suitor. Federal fell 50 cents to $46.75.

Reliance Group Holdings Inc., controlled by investor Saul Steinberg, said earlier this month that it was considering a bid for Tiger. Reliance has now granted Federal an option to buy its 14.8% stake at the same price being offered to all other holders.

“While our two businesses have to date served different markets, we believe the merger will result in significant operating efficiencies which will benefit our respective customers,” Smith said.

“The fact that Federal has on order over 60 additional jet aircraft is clear evidence that there will be future growth opportunities for the employees of both Federal and Flying Tigers,” he said.

Federal Express, with blue and orange colors on its packages, trucks and airplanes, has no intention of losing its market share in the overnight business to UPS, which is about three times bigger.

Earlier story, Part IV, Page 2.