This marks the direct entry of the $33 billion FedEx, which has nearly 275,000 employees and 670 aircraft worldwide.
Mumbai-based Prakash Air Freight Pvt Ltd, a privately held company, is one of the largest domestic companies in the industry with 384 offices serving nearly 4,400 destinations.
The two key promoters of Prakash Air Freight Pvt Ltd, Rajan K Manchanda and Vijay Narang, could not be reached for comments on their decision to cash out.
FedEx applied to the Foreign Investment Promotion Board about two weeks ago for permission to undertake the acquisition.
"This is the next logical step in the ongoing development of our Indian business," said Robert Elliott, president of FedEx Express (Europe, West Asia, Africa and the Indian subcontinent).
Sources said the deal, subject to the usual mandatory approvals, could be concluded in two weeks. JP Morgan acted as financial adviser to FedEx.
This acquisition comes close on the heels of TNT NV acquiring the Secunderabad-based road express company Speedage Express Cargo Services from Associated Road Carriers India for an undisclosed amount in September. Speedage posted a turnover of Euro 17 million in 2005-06 (nearly Rs 100 crore).
Earlier, Anil Ambani-promoted Reliance Capital had acquired a 44 per cent stake in the Bangalore-based courier and express company DTDC in mid-February.