Airborne, Inc. and DHL announced that they have entered into a definitive merger agreement that will create a stronger third competitor in the U.S. express delivery market and bring the benefits of intensified competition and enhanced service to millions of small- and medium-sized businesses that purchase expedited door-to-door delivery of small packages and documents.

Under the terms of the agreement, DHL will acquire Airborne's ground operations. Upon conclusion of the acquisition, Airborne's air operations will be separated from its ground operations and will become an independent public company, called ABX Air, Inc. ABX Air will be wholly owned by Airborne's current shareholders.

UPS and FedEx together has aprox. a 79% share of the U.S. express delivery market, and the combination of DHL and Airborne will enable the new group to create a much stronger competitor, which will benefit a broader range of express delivery customers," said Carl Donaway, Chairman and CEO of Airborne, who will become the CEO of the enlarged DHL business in the U.S. "In the markets we compete in today, made up primarily of large, corporate accounts, Airborne's price levels are substantially lower than our competitors. The expanded DHL business will have the capital and resources to leverage this value into the small to mid-sized marketplace.

"This combination will strengthen DHL's presence in the U.S., and our global presence will bring significant benefits to Airborne customers," said Uwe Doerken, CEO of DHL Worldwide. "We see great opportunity for DHL to build on the capabilities of the new combined company in the U.S. market, especially in the under-served small- and medium-sized business segments, and we are prepared to make a substantial long-term marketing investment to build a strong competitor able to provide increased value for U.S. customers."

Airborne is the third largest air overnight parcel carrier in the United States, with an 18.82 % market share in the air overnight category, delivering approximately 356 million domestic parcels in 2002. DHL has the world's most extensive international parcel delivery network, with service to 120,000 destinations in more than 220 countries worldwide. Although DHL has the leading market share in international express delivery outside the U.S., it has less than a 2% share of the U.S. air overnight domestic market today.

The U.S. ground operations of Airborne and DHL will operate under the DHL brand. "We will seek to build on the best of both companies while maintaining our focus on superior service, performance and productivity. The combination of Airborne and DHL will result in increased opportunity for employees of both companies because the combined U.S. operations will be able to compete more effectively and pursue a more aggressive growth strategy," said Donaway.

The transaction, which is subject to shareholder and regulatory approvals, is expected to be completed during the summer of 2003.

Goldman, Sachs & Co. is serving as financial advisor to Airborne and O'Melveny & Myers is serving as legal advisor. Deutsche Bank is serving as financial advisor to DHL and Simpson Thacher & Bartlett is serving as legal advisor.

Airborne, Inc. is the holding company for Airborne Express. For more than 50 years, Airborne Express has served the shipping needs of business customers around the world. Today, Airborne offers total distribution solutions by providing customers time-sensitive delivery of documents, letters, small packages, and freight to virtually every U.S. ZIP code and more than 200 countries. Customers can select from a variety of services including same-day, next-morning, next-afternoon or second-day delivery, air freight, ocean service, and logistics management. Airborne employs over 22,000 people worldwide.

DHL is the world's leading express and logistics company offering customers innovative and customized solutions from a single source. With global expertise in solutions, express, air and ocean freight and overland transport, DHL combines worldwide coverage with an in-depth understanding of local markets. DHL's international network links over 120,000 destinations in more than 220 countries and territories, and employs 71,000 people. DHL is majority owned by Deutsche Post World Net.