Yellow Expands Its Network With $200 Million Bid for Jevic
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It is Jevic Transportation, a publicly owned regional and inter-regional less-than-truckload and truckload carrier based in Delanco, N.J.
On June 7, Jevic's board of directors recommended that shareholders accept a buyout by Yellow of all Jevic stock at $14 a share, or $161 million.
The total value of the offer, including debt assumption, is about $200 million. Yellow said it will borrow the money to complete the transaction.
Industry analysts generally applauded the deal, saying the addition of a profitable regional carrier should boost Yellow's profits and give its stock a lift.
The acquisition also puts Yellow in a position to potentially compete with Con-Way Transportation Services, a unit of CNF Transportation of Palo Alto, Calif., and USFreightways Corp. of Rosemont, Ill., for a share of the fast-growing market for regional trucking services. USFreightways and Con-Way each operate very profitable nationwide regional trucking groups.
Jevic management had high hopes for growth when it completed a public stock offering in August 1997. However, investors have ignored the lightly traded stock, which began trading at $15 a share and went as high as $17 before falling off to a low of $5 a share during the past 12 months. The stock has traded in the $10 to $11 range in recent weeks.
"The marketplace was not ready to understand the difference in our operations," said Peter Robinson, director of corporate communications for Jevic. "When LTL stocks went down, we did too."
With low stock prices precluding the sale of additional equity, Robinson said management concluded that its best hope was to cast Jevic's lot with a larger company like Yellow.
For the full story, see the June 14 print edition of Transport Topics. Subscribe today.
