Arkansas Best to sell intermodal unit
Arkansas Best Corp., parent company of top three less-than-truckload carrier ABF Freight System, has reached a tentative agreement to sell its Clipper intermodal subsidiary to Canadian firm Bluenose Holdings Inc. for $20 million, the company said in a filing with the Securities & Exchange Commission.
Bluenose is a division of Wheels Group, a third-party logistics provider in Mississauga, Ontario. The two companies must still work out definitive terms and financing before the sale closes, possibly in the third quarter, Arkansas Best said.
Clipper is a non-asset-based company that provides intermodal marketing, truckload brokerage, transloading, consolidation and distribution services.
Clipper, which Arkansas Best acquired more than 10 years ago, had revenue of $108 million in 2005. First quarter revenue was $25.7 million, up 9.5 percent from $23.5 million sales level in first quarter 2005. The company had operating income of $506,000 compared with a loss of $23,000 in the first quarter of 2005. Clipper’s operating income and operating ratio of 98 percent were the best results since 1996.
Arkansas Best’s first quarter earnings fell to $6.1 million in the first quarter compared to $10.5 million, during the same period last year. The Fort Smith, Ark.-based transportation holding company had revenue of $451 million.
Clipper is a relatively small piece of Arkansas Best Corp. and does not have a lot of synergy with ABF Freight System, David Humphrey, director of investor relations, said. He indicated that railroad problems with on-time service made it difficult for Clipper to operate successfully.
Robert Davidson, chief executive officer of Arkansas Best, first announced the agreement in principle during a Bear Stearns investor conference in New York.
