Yellow buying spree now includes USF
Yellow Roadway Corp. said Sunday it plans to acquire Chicago-based USF Corp., a holding company for several regional and national less-than-truckload carriers, for $1.37 billion in stock and cash. Yellow Roadway will also assume $99 million in debt.
The move further cements Yellow Roadway as the largest piece shipment motor carrier and one of the largest freight transportation companies in the United States, and puts pressure on its primary competitor, ABF Freight Systems Inc.
In December 2003, Yellow Corp. completed its $1.1 billion acquisition of top-five LTL competitor Roadway Corp. Yellow bought New Penn Motor Express a few years ago.
The announcement surprised some analysts who wondered why Yellow Roadway, a unionized trucking outfit, would acquire USF’s non-union units, potentially complicating labor relations. The acquisition includes USF’s logistics division, and some questioned why Yellow went ahead and agreed to also buy the asset-intensive trucking companies rather than focus on expanding its logistics capabilities.
Yellow officials have said the integration of Roadway and its Roadway Express operating unit has gone very smoothly. Roadway Express continues to operate as a separate brand within the corporation, with most integration happening in the back office.
“Our strategic rationale for this transaction is focused on enhanced scale, complementary service offerings and significant cost synergies,” said Bill Zollars, Yellow Roadway’s chairman and president, in a statement.
Jim Staley, president of the Roadway group, will also be in charge of the USF regional subsidiaries USF Holland, USF Reddaway, USF Dugan and USF Bestway and truckload carrier USF Glen Moore.
Last year, USF shut down USF Red Star in response to a strike by union workers that resulted in a significant loss of customers and revenue.
The transaction is expected to close in the summer, pending the approval of shareholders and regulators.