Yellow-Roadway will be 'The Big ONE'

| 7/9/2003

The “Big Three” have become the “Big ONE.” This week, Yellow Corp. agreed to acquire Roadway Corp. for about $966 million in cash and stock, plus $140 million in debt, for a total value of $1.1 billion. The company, which will be known as Yellow-Roadway Corp., will be the largest U.S.-based less-than-truckload carrier.

For years, LTL freight was dominated by Yellow, Roadway and Consolidated Freightways. Consolidated Freightways, which had been the nation's third-largest trucker, closed and filed for bankruptcy protection last September.

The deal values each Roadway share at $48, the companies said in a joint statement Tuesday. That represents a 49 percent premium based on the average closing price of Roadway stock over the past 60 days, the companies said.

Based on Monday's closing price of $30.02, Yellow is offering a 60 percent premium to Roadway shareholders. Both stocks were halted Tuesday morning for news dissemination. Yellow Corp. shares, listed on the New York Stock Exchange, closed Monday at $24.49.

The combined entity posted nearly $6 billion in revenue for the 12 months ending March 31.

Also Tuesday, Roadway reported its second-quarter earnings rose 11 percent to $6.3 million, or 33 cents a share, meeting its reduced target. Revenue for the quarter was $741.5 million, up 13 percent.

According to a company release, Roadway had slashed its second-quarter estimate in early June, blaming soft tonnage levels, pricing pressures and a shift in freight mix. Some analysts attributed the shortfall to company-specific issues rather than to wider industry concerns.