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UPS buying Mailboxes
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March 2, 2001: 7:09 p.m. ET
Parcel delivery company will continue to have competitors serve 4,300 locations
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NEW YORK (CNNfn) - United Parcel Service is buying franchiser Mailboxes Etc. for an undisclosed amount, the companies announced late Friday.
Mailboxes Etc. has about 4,300 retail locations worldwide, with about 3,400 of those in the United States. All are owned and operated by franchisees, and all will let their customers ship packages via both UPS and its competitors, such as FedEx Corp. and the U.S. Postal Service.
"We literally have had a relationship with decades with the entire authorized shipping outlet industry," said Norman Black, a spokesman for UPS. "Mailboxes Etc. is obviously the largest, but what we do with all the ASOs is not going to change, and the product mix at the Mailboxes Etc. is not going to change."
 FedEx recently reached an agreement with the USPS which may will have the option to place a self-service drop box in every postal service location. While UPS will also have an opportunity to place its drop boxes at post offices as well, it has yet to do so. The deal for Mailboxes Etc. does give UPS a chance to play catch-up with FedEx, which has far more FedEx-branded retail offices than its competitor.
It also provides resources for a possible rapid expansion of Mailboxes Etc. overseas. The company now serves 29 nations, but it has agreements in place in a total of 72 nations, said Brandyn Jennings, a spokeswoman for the company.
"We're hoping this deal will help fuel our growth and our international expansion will be included in that," she said.
UPS used to be a privately held company that has made relatively few acquisitions. In November, 1999, it did what was then the nation's largest initial public offering, partly in order to have stock with which to become more active in acquisitions. Black said this deal is a cash transaction, however.
In January UPS announced a stock deal for Fritz Companies (FRTZ: Research, Estimates), a major freight-handling company.
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Mailboxes Etc. is a unit of U.S. Office Products, which purchased a then independent Mailboxes for about $330 million in 1997, said Laura Smith, a spokeswoman for the holding company. She said that the chain was its only franchise operation and only retail segment of the business-to-business office supply company.
It makes up a relatively small portion of U.S. Office Products' revenue but about 20 percent of its earnings before interest, taxes, depreciation and amortization, Smith said. The company had EBITDA of $14.3 million on revenue of $533.3 million in its fiscal second quarter, its most recent period. But the troubled company, which was removed from the Nasdaq national exchange in May 2000, posted a net loss for the quarter of $261.4 million.
Shares of UPS (UPS: Research, Estimates) gained 94 cents to $56.94 in trading Friday ahead of the announcement. U.S. Office Products is traded on the Nasdaq bulletin board. Its shares lost 1 cent to 8 cents in trading Friday. 
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