Trucking giant Yellow Corp. is buying Roadway Corp. for US$966 million in cash and stock.
Yellow Corporation and Roadway Corporation, two of the most widely recognized brand names in the transportation industry, announced that they have entered into a definitive agreement. Roadway is the parent company for Reimer Express Lines Ltd., one of the largest Canadian carriers. . Under the terms of the deal, Overland Park, Kan.-based Yellow will also assume $140 million US in Roadway debt and Roadway will be positioned as a unit within the newly named Yellow-Roadway Corp.
Both companies are less-than-truckload carriers, meaning they consolidate freight from multiple customers, but company administrators said the brands might specialize in different things over time.
The combined company, Yellow-Roadway Corporation, will be one of the largest transportation service providers in the world, with the ability to move shipments domestically and internationally. Yellow-Roadway will be the largest U.S.-based transportation service provider with a focus on big shipments for business-to-business customers.
“The complementary operations and capabilities of Yellow and Roadway provide the combined company with the increased scale, strong financial base, and market reach necessary to further build shareholder value and enhance customer service through growth and expansion opportunities.,” states a release issued by both companies. “For these reasons, this is the right transaction at the right time with the right partner.”
Despite the weak U.S. economy, the trucking sector benefited in the past year from the September collapse of Consolidated Freightways, which filed for Chapter 11 bankruptcy and liquidated its assets. That enabled Yellow, Roadway and other competitors to snap up increased shares of the market.
Even before Consolidated’s bankruptcy, though, large trucking companies had been increasing their freight levels as thousands of smaller carriers went out of business during the latest economic downturn.
In the year ending March 31, Yellow and Roadway had combined revenue of nearly $6 billion US. Once combined, the companies said they expect to save $45 million by the end of their second year together from operating efficiencies and cost cuts. (With files from AP)