Fuller, Quinn Offer $176 Million to Take U.S. Xpress Private
By Jonathan S. Reiskin, Associate News Editor
This story appears in the July 2 print edition of Transport Topics.
The two founders of U.S. Xpress Enterprises, the nation’s sixth-largest truckload carrier, said they want to buy back the part of the Chattanooga, Tenn., company they don’t already own for an estimated $176 million, taking the $300 million company private.
The offer by Max Fuller and Patrick Quinn — through their Mountain Lake Acquisition Co. firm — calls for a buyout price of $20 a share, or 40.8% above the shares’ closing price of $14.20 on June 22, the day they announced their intent to the U.S. Xpress board of directors.
Fuller and Quinn, the immediate past chairman of American Trucking Associations, founded U.S. Xpress in 1985 and started longhaul truckload operations early the following year. They took the company public in October 1994. U.S. Xpress ranks No. 21 on the Transport Topics 100 list of the nation’s largest for-hire carriers.
Fuller and Quinn said they will commence their tender offer “as soon as practicable,” and they would also like to complete the deal quickly. A company spokes-man said he could not comment further on the transaction beyond the company’s published statements.
In recent years, more trucking companies have left public stock exchanges than have entered them. Swift Transportation Co. went private earlier this year, and Transport America left the year before. Smithway Motor Xpress Corp., a public flatbed carrier, has agreed to be purchased by privately held Western Express.
Stock analyst Edward Wolfe, who follows U.S. Xpress for Bear, Stearns & Co., estimated that Fuller and Quinn would have to spend $177 million to buy out the company. Thom Albrecht of Stephens Inc. pegged the price at $174 million.
John Larkin of Stifel, Nicolaus & Co. said it could take about three months to complete such a deal.
Albrecht speculated on the reason for the move, saying, “Presumably, they are tired of operating in a public environment.”
Kenneth DeWitt, a partner in accounting firm Tidwell-DeWitt, said that life on the stock exchange is not as appealing for a medium-size company as it once was.
“The federal Sarbanes-Oxley law is focused on internal financial control systems, and it mandates that corporate officers must take personal responsibility for the accuracy of results and the soundness of controls,” DeWitt said.
“Some companies are spending right and left in order to ensure compliance. The cost of audits has risen by two to four times. So, in a tight-margin industry like trucking, you might want to go private.
“With private equity and venture capital funding, there are now other ways to access capital. Sarbanes-Oxley has led to a sea change in views on going public,” said DeWitt, whose Alabama- and Georgia-based firm has a substantial trucking practice.
The company originally specialized in long hauls, but Fuller and Quinn reconfigured the company earlier this decade to offer dedicated contract carriage, regional and team-expedited truckload, and intermodal services. Its Xpress Global Systems unit provides transportation, distribution and warehousing services for the floor-covering industry.
The two men also embarked on an expansion campaign by acting like a private equity firm and buying 49% stakes in smaller truckload carriers Arnold Transportation Services and Total Transportation of Mississippi. U.S. Xpress later increased its ownership in those companies to 80% each.
Since August, U.S. Xpress also has had a 49% interest in Abilene Motor Express, Richmond, Va.
Fuller, who also is chief executive officer, Quinn, the company’s president, and their respective families already own about 42% of the company’s 15.4 million common shares — including 3.04 million Class B shares that carry two votes each. Therefore, U.S. Xpress said in announcing the proposal, Quinn and Fuller “and their affiliated entities represent over 50% of the voting power of all of the company’s outstanding common stock.”
In a letter to U.S. Xpress employees, Quinn and Fuller said they intended “to utilize a two-step tender offer structure, consisting of a tender offer followed by a ‘short form’ merger. . . . After this process, [U.S. Xpress] would be owned by the Quinn and Fuller families. We believe this process offers the advantages of speed and direct dealing with the public stockholders.”
The letter to employees said U.S. Xpress’ three independent directors will meet as a committee to evaluate the proposal and make a recommendation to shareholders. SunTrust Bank and its capital markets division have agreed to provide Fuller and Quinn with the financing necessary to buy back the corporation.
In a letter to the board, they said they would not consider any offer to purchase the shares they control, thereby blocking any offers by a potential rival buyer.
In addition to Fuller and Quinn, the board consists of Robert Suddeth Jr., former chairman and CEO of SunTrust Bank; James Hall, former chairman of the National Transportation Safety Board; and attorney John Murrey III.
Fuller and Quinn also said that for them to complete their tender offer, they want the number of shares offered to represent 90% of the corporation’s total number of shares outstanding when combined with the shares they already control. To hit their 90% threshold requirement, the Fuller-Quinn tender offer must pull in about 83% of the outstanding Class A shares they do not already own.
This story appears in the July 2 print edition of Transport Topics.
The two founders of U.S. Xpress Enterprises, the nation’s sixth-largest truckload carrier, said they want to buy back the part of the Chattanooga, Tenn., company they don’t already own for an estimated $176 million, taking the $300 million company private.
The offer by Max Fuller and Patrick Quinn — through their Mountain Lake Acquisition Co. firm — calls for a buyout price of $20 a share, or 40.8% above the shares’ closing price of $14.20 on June 22, the day they announced their intent to the U.S. Xpress board of directors.
Fuller and Quinn, the immediate past chairman of American Trucking Associations, founded U.S. Xpress in 1985 and started longhaul truckload operations early the following year. They took the company public in October 1994. U.S. Xpress ranks No. 21 on the Transport Topics 100 list of the nation’s largest for-hire carriers.
Fuller and Quinn said they will commence their tender offer “as soon as practicable,” and they would also like to complete the deal quickly. A company spokes-man said he could not comment further on the transaction beyond the company’s published statements.
In recent years, more trucking companies have left public stock exchanges than have entered them. Swift Transportation Co. went private earlier this year, and Transport America left the year before. Smithway Motor Xpress Corp., a public flatbed carrier, has agreed to be purchased by privately held Western Express.
Stock analyst Edward Wolfe, who follows U.S. Xpress for Bear, Stearns & Co., estimated that Fuller and Quinn would have to spend $177 million to buy out the company. Thom Albrecht of Stephens Inc. pegged the price at $174 million.
John Larkin of Stifel, Nicolaus & Co. said it could take about three months to complete such a deal.
Albrecht speculated on the reason for the move, saying, “Presumably, they are tired of operating in a public environment.”
Kenneth DeWitt, a partner in accounting firm Tidwell-DeWitt, said that life on the stock exchange is not as appealing for a medium-size company as it once was.
“The federal Sarbanes-Oxley law is focused on internal financial control systems, and it mandates that corporate officers must take personal responsibility for the accuracy of results and the soundness of controls,” DeWitt said.
“Some companies are spending right and left in order to ensure compliance. The cost of audits has risen by two to four times. So, in a tight-margin industry like trucking, you might want to go private.
“With private equity and venture capital funding, there are now other ways to access capital. Sarbanes-Oxley has led to a sea change in views on going public,” said DeWitt, whose Alabama- and Georgia-based firm has a substantial trucking practice.
The company originally specialized in long hauls, but Fuller and Quinn reconfigured the company earlier this decade to offer dedicated contract carriage, regional and team-expedited truckload, and intermodal services. Its Xpress Global Systems unit provides transportation, distribution and warehousing services for the floor-covering industry.
The two men also embarked on an expansion campaign by acting like a private equity firm and buying 49% stakes in smaller truckload carriers Arnold Transportation Services and Total Transportation of Mississippi. U.S. Xpress later increased its ownership in those companies to 80% each.
Since August, U.S. Xpress also has had a 49% interest in Abilene Motor Express, Richmond, Va.
Fuller, who also is chief executive officer, Quinn, the company’s president, and their respective families already own about 42% of the company’s 15.4 million common shares — including 3.04 million Class B shares that carry two votes each. Therefore, U.S. Xpress said in announcing the proposal, Quinn and Fuller “and their affiliated entities represent over 50% of the voting power of all of the company’s outstanding common stock.”
In a letter to U.S. Xpress employees, Quinn and Fuller said they intended “to utilize a two-step tender offer structure, consisting of a tender offer followed by a ‘short form’ merger. . . . After this process, [U.S. Xpress] would be owned by the Quinn and Fuller families. We believe this process offers the advantages of speed and direct dealing with the public stockholders.”
The letter to employees said U.S. Xpress’ three independent directors will meet as a committee to evaluate the proposal and make a recommendation to shareholders. SunTrust Bank and its capital markets division have agreed to provide Fuller and Quinn with the financing necessary to buy back the corporation.
In a letter to the board, they said they would not consider any offer to purchase the shares they control, thereby blocking any offers by a potential rival buyer.
In addition to Fuller and Quinn, the board consists of Robert Suddeth Jr., former chairman and CEO of SunTrust Bank; James Hall, former chairman of the National Transportation Safety Board; and attorney John Murrey III.
Fuller and Quinn also said that for them to complete their tender offer, they want the number of shares offered to represent 90% of the corporation’s total number of shares outstanding when combined with the shares they already control. To hit their 90% threshold requirement, the Fuller-Quinn tender offer must pull in about 83% of the outstanding Class A shares they do not already own.
