FedEx: Class Action Filed On Behalf of all Persons or Entities Who Purchased, or Otherwise Acquired, FedEx Common Stock Between September 19, 2017 and December 18, 2018, Inclusive

Kehoe Law Firm, P.C. is advising FedEx shareholders that on June 26, 2019, a securities class action lawsuit was filed against FedEx Corporation (“FedEx” or the “Company”) and certain FedEx executives. The class action lawsuit asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, on behalf of all persons or entities who purchased, or otherwise acquired, FedEx common stock between September 19, 2017 and December 18, 2018, inclusive (the “Class Period”). 

According to the class action complaint filed in United States District Court, Southern District of New York, in 2016, FedEx, “a global logistics company that ships goods to commercial and residential customers throughout the world,” “. . . significantly expanded its international operations through its $4.8 billion acquisition of TNT Express N.V. (TNT), a Netherlands-based logistics company with operations concentrated in Europe. To date, this has been the largest acquisition in FedEx history. This acquisition instantly added billions of dollars of European revenues to FedEx’s topline and increased the Company’s international revenue mix from 24 percent in fiscal year 2016 to 33 percent in fiscal year 2017.”

The complaint further states that

[a]fter the acquisition closed, FedEx embarked on an aggressive strategy to integrate its legacy European operations with TNT. On March 31, 2017, nine months after completing the acquisition, FedEx issued a three-year operating income improvement target in order for investors to gauge and track the purported benefits of the TNT acquisition and FedEx’s integration efforts. Specifically, the Company stated that, in fiscal year 2020, its integration with TNT would result in a $1.2 billion to $1.5 billion operating income improvement above its fiscal year 2017 reported operating income (the “TNT Income Improvement Target”).

On June 27, 2017, however, TNTs operations were crippled by a cyberattack known as NotPetya, which involved the spread of a malware virus throughout TNTs systems (the Cyberattack). NotPetya is considered one of the largest cyberattacks in history, having affected a multitude of companies on a global scale. The timing of the attack was particularly problematic for FedEx, as TNTs systems were paralyzed during the critical period involving the integration of TNT with the Company’s legacy European operations.

. . . 

Throughout the Class Period, Defendants continually assured investors about its recovery from the Cyberattack and that any negative impact from the attack was minimal. For example, Defendants told investors that TNT customer volumes were being restored to pre-attack levels and that despite the cyberattack, the customers stuck with us.Defendants also stated that TNT integration efforts were successfully progressing and continuously stated that FedEx was “on track” to achieve the TNT Income Improvement Target.

Notwithstanding these positive representations to the market, Defendants made false and misleading statements and/or failed to disclose that: (1) TNTs overall package volume growth was slowing as TNTs large customers permanently took their business to competitors after the Cyberattack; (2) as a result of the customer attrition, TNT was experiencing an increased shift in product mix from higher-margin parcel services to lower-margin freight services; (3) the anticipated costs and timeframe to integrate and restore the TNT network were significantly larger and longer than disclosed; (4) FedEx was not on track to achieve the TNT Income Improvement Target; and (5) as a result of these undisclosed negative trends and cost issues, FedExs positive statements about TNTs recovery from the Cyberattack, integration into FedExs legacy operations, customer mix, customer service levels, profitability, and prospects lacked a reasonable basis. [Emphasis added.]

Additionally, according to the complaint, ‘[t]he truth about TNT’s deteriorating business was revealed through a series of disclosures,” which culminated in a FedEx stock drop of $22.50 per share (more than 12%) to close at $162.50 on December 19, 2018.

FedEx investors have until August 26, 2019 to move the Court to serve as lead plaintiff in the securities class action lawsuit.  If you purchased, or otherwise acquired, FedEx common stock during the Class Period and suffered losses, please click Join a Securities Class Action or contact either John Kehoe, Esq, (215) 792-6676, Ext. 801, [email protected], or Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected], to discuss your legal options.   

Kehoe Law Firm, P.C.