The chain will be purchased for $2.4 billion in cash.

MEMPHIS, Tenn. (AP) – Shipping giant FedEx Corp. agreed to buy the Kinko’s copy shop chain for $2.4 billion in cash, the companies announced Tuesday. The seller is buyout firm Clayton, Dubilier & Rice Inc., which owns approximately 75 percent of privately held Kinko’s outstanding shares. FedEx already does business with Kinko’s and has counters in many of its shops.

“The FedEx and Kinko’s combination will substantially increase our retail presence worldwide and will enable both companies to take advantage of growth opportunities in the fast-moving digital economy,” said Frederick W. Smith, FedEx chairman, president and chief executive officer.

The transaction is expected to close in the first quarter of 2004.

Memphis-based FedEx runs the world’s largest express transportation company. Kinko’s is a leading provider of copying and other business services.

Smith told The Associated Press on Tuesday morning that the acquisition is a “good fit” for the package delivery company because it will improve access to FedEx services.

FedEx has been Kinko’s exclusive shipping provider since 1988 and already staffs counters in 134 of Kinko’s 1,200 stores. After the purchase, FedEx will have full-service counters in all Kinko’s stores.

“It will be an important channel for small and medium customers,” Smith said.

The Kinko’s management team is expected to remain in place, and company headquarters will continue to be located in Dallas. Kinko’s CEO Gary Kusin said the FedEx brand and deep financial reserves will bring a boost for his company.

“We currently are the ‘back office’ for hundreds of thousands of midsize businesses in copying, printing and computer services,” he said. The acquisition will turn Kinko’s into a “a one-stop back office,” Kusin said.

AP-ES-12-30-03 1008EST