Yellow Roadway to acquire USF Corp. for $1.37 billion

0 Comments | Deseret News (Salt Lake City), Feb 28, 2005 | by Margaret Stafford Associated Press

KANSAS CITY, Mo. -- Trucking company Yellow Roadway Corp. has agreed to buy rival USF Corp. in a deal worth about $1.37 billion, the two companies announced Sunday.

The deal, which has been unanimously approved by the boards of both companies, also requires Yellow to assume an expected $99 million in USF debt. The acquisition is expected to close this summer.

The new company will have an estimated annual revenue of more than $9 billion with more than 70,000 employees and 1,000 service locations, according to a news release announcing the deal.

The companies said the transaction is expected to result in savings of about $40 million in the first year and long-term savings of at least $150 million. The announcement did not discuss the possibility of layoffs.

Representatives from Yellow and USF did not immediately return calls Sunday from The Associated Press.

If it is approved by the two companies' shareholders, it would be the second major acquisition for Yellow in the last 1 1/2 years. Overland Park-Kan. based-Yellow Corp. essentially doubled its size when it merged with competitor Roadway Corp. in late 2003.

After that acquisition, Yellow became the nation's revenue leader among trucking companies specializing in carrying less than a truckload, or LTL.

Yellow reported 2004 earnings of $184.2 million on $6.8 billion in revenue, compared with 2003 income of $40.7 million on $3.07 billion in revenue. Yellow's stock price has increased 89 percent in the past year.

On the other hand, Chicago-based USF has been hurt in recent years by Teamsters strikes and declining business as well as the resignation in November of its chairman and CEO, Richard DiStasio.

The company reported 2004 earnings of $23.8 million on $2.4 billion in revenue, compared with earnings of $42.3 million on $2.3 billion in revenue the year before.