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Yellow Corp. to Buy
Roadway for $966 Million
The combined trucking concerns, which will be known as Yellow-Roadway Corp., together reported nearly $6 billion in revenue for the 12 months ending March 31.
The proposed deal values each Roadway share at $48, a 49% premium based on the average closing price of Roadway stock over the past 60 days, the companies said.
The per-share offer represents a 60% premium to Roadway's Monday closing price of $30.02 on the Nasdaq National Market. Shares of Nasdaq-listed Yellow Corp. closed at $24.49 Monday.
In morning trading Tuesday, Roadway shares were up $14.66, or 48%, to $44.68 each. Shares of Yellow Corp. fell $2.78, or 11%, to $21.71.
The deal also includes the assumption of $140 million in Roadway debt, bringing the total value of the transaction to $1.1 billion, the companies said.
Yellow, based in Overland Park, Kan., expects the acquisition to add to earnings within 12 months after closing. The company anticipates cost savings of $45 million by the end of the second year and as much as $125 million by the fifth year.
Yellow and Roadway plan to identify duplication within the two organizations, but expect "minimal" job loss among field sales and operations at either company. Work force decisions among other groups will be made based on "best practices and expertise, irrespective of company affiliation," the two concerns added.
Bill Zollars, Yellow's chairman, president and chief executive, will assume the same responsibilities in the combined company. James D. Staley, Roadway's president and CEO, will continue to lead Roadway, Akron, Ohio, when it becomes an operating entity under the combined entity.
A representative with Yellow's media-relations firm declined to provide the estimated closing date, or to field any other questions. A spokesman at Yellow Corp. wasn't immediately available, nor was a representative at Roadway.
Roadway's Profit Rises 11%
Also Tuesday, Roadway reported an 11% increase in net income to $6.3 million, or 33 cents a share, for its fiscal second quarter the period ended June 21, compared with $5.7 million, or 30 cents a share, a year earlier. Revenue rose 13% to $741.5 million from $656 million a year earlier.
Last month, Roadway slashed its earnings estimate to 33 cents a share, from an April forecast of 65 cents to 79 cents a share, and trimmed its revenue projection to a 13% increase from a prior estimate of 16% to 19% growth.
Both periods included results from Arnold Transportation Services, which Roadway sold in January. Excluding discontinued operations, earnings from continuing operations came to $6.6 million, or 35 cents a share, compared with $ 4.6 million, or 25 cents a share, a year earlier.
Roadway said it expects earnings from continuing operations of between 60 cents and 70 cents a share in the third quarter, compared with 33 cents a year earlier. The company anticipates revenue growth of 11.5% to 12.5%.
For the full year, the company sees earnings from continuing operations in the range of $2.36 to $2.60 a share, compared with $1.85 a share in 2002. Revenue growth for the year is estimated between 8.5% and 9.5%.