) is the third horse in a two-horse race between United Parcel Service and FedEx. Indeed, as No. 3 in the express delivery business, Airborne is way behind: In 2000, Airborne's sales were $3.3 billion, vs. $29.7 billion at UPS and $18.2 billion at FedEx. But that could change: Air-cargo sources whisper that Germany's DHL Worldwide Express has held informal talks with Airborne about acquiring a minority stake. In May, DHL said it intended to create a full U.S. ground-parcel unit and was awaiting a go-ahead from Uncle Sam. Airborne has an integrated air-and-ground network for door-to-door delivery of small packages and documents. Its ground network includes nine regional hubs, 700 trucks, and 100 tractors.
Despite Airborne's also-ran status, it should not be counted out, says Peter Jacobs of Wells Fargo Van Kasper. In overnight delivery, Airborne has an 18% share, notes Jacobs, who rates Airborne a buy. He says a foreign entity is barred from buying a majority stake in a U.S. airline--Airborne's classification. Airborne, now at 10, could be worth 20 to a strategic buyer, says Jacobs. He notes that DHL has a "significant non-U.S. presence," making Airborne attractive if DHL looks to expand in the U.S. via a minority stake. Jacobs says other buyers could take advantage of Airborne's low valuation. He puts its book value at more than $17 a share. Airborne and DHL couldn't be reached for comment. By Gene G. Marcial