US-based logistics major FedEx Corp. said that it will acquire the logistics, distribution and express businesses of Mumbai-based AFL Pvt. Ltd. and its affiliate, Unifreight India Pvt. Ltd. The deal by the FedEx Express business unit will give the $38 billion firm domestic ground network and added capabilities in India. FedEx expects the deal will close in its third fiscal quarter, which ends February 2011.

The deal size was not disclosed. FedEx earlier acquired its Indian service provider Prakash Air Freight for $30 million in cash in 2006.

Overseas players are increasingly eyeing the Indian logistics and freight services market. Japan's Hitachi Transport System had acquired Flyjac Logistics Pvt Ltd, a leading domestic logistics major for Rs 250 crore in May. In January, Nippon Yusen Kaisha (NYK), one of the world’s largest logistic groups, picked up about 26% stake in Tata Steel subsidiary TM International Ltd, which handles bulk cargo such as coal for Tata Steel and other customers.

Founded in 1945, AFL Pvt. Ltd is a privately held company promoted by Cyrus Guzder. The deal includes the purchase of AFL Logistics and Distribution, which consists of a wide range of products and services, including supply chain management, warehousing, and a ground distribution network that provides day-definite ground transportation for small packages and heavyweight shipments through more than 200 daily scheduled routes.

The deal also includes AFL WiZ Express, which offers express services through more than 160 Express Service Centers serving across 144 cities in India.

"The acquisition supports our long-term strategy to grow our international business and better serve our customers seeking to expand or enter the Indian market," said Michael L. Ducker, COO, FedEx Express.

"While our extensive network and logistics infrastructure will enable FedEx to deepen its penetration of the Indian market, I believe AFL's customers will be excited by the prospects of AFL's service offering being strengthened under the leadership of a global leader in express delivery and transportation," said Cyrus Guzder, Chairman of AFL.

After the acquisition closes, Guzder will assume the role of Executive Advisor to FedEx.

J.P. Morgan is serving as financial advisor to FedEx. Evercore Partners and Ardashir Dubash are serving as financial advisors to AFL.

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