February 28, 2005 9:00 AM, EST

Yellow Roadway to Buy USF Corp. for $1.37 Bln.

Combined Company Would Produce $9 Bln. in Annual Revenue

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ellow Roadway Corp. said Sunday it had entered into a definitive agreement to acquire USF Corp. for $1.37 billion.

The less-than-truckload carriers said in a statement they expect the combined enterprise to have annual revenue of over $9 billion, with more than 70,000 employees and 1,000 service locations.

Yellow Roadway is No. 3 in the Transport Topics 100 listing of North American for-hire carriers and USF Corp. is No. 12. In addition to LTL operations, USF also has logistics and warehousing operations.

“It’s a great transaction for us,” Thomas Bergmann, acting chief executive officer of USF, told Transport Topics Monday morning.

USF was going through a transition and was approached by Yellow about the deal, he said.

“We decided from a customer and employee aspect this would allow us to grow faster and clearly is good for our shareholders,” Bergmann said. “I feel good about this from all our major constituencies.”

Yellow Roadway will run USF separately, Bergmann said, similar to how Yellow operates Yellow Transportation and Roadway Corp., following those two companies’ mergers in December 2003.

The deal is still subject to approval by both companies’ stockholders and antitrust review, he told TT.

The carriers said they expect the deal to close this summer. Yellow Roadway will also assume about $99 million in net USF debt, resulting in a total value of the deal of about $1.47 billion.

News of a potential acquisition was first reported last Wednesday by the Wall Street Journal, which said Yellow Roadway was seeking to capitalize on its stock price, which hit record closing highs Wednesday, Thursday and Friday, closing at $61.31 a share Friday.

The deal will allow USF shareholders to elect for each share they hold either $45 in cash or 0.9024 shares of Yellow Roadway common stock, the two said.

Bergmann told TT he saw “good synergies” between USF’s logistics division and Yellow Roadway’s Meridian IQ supply chain management subsidiary.

Both companies are highly unionized, with their workers represented by the Teamsters union.

“We will carefully monitor the pending deal and do our own analysis so that our members’ interests are protected,” Teamsters President James Hoffa said in a statement.

USF’s biggest operation is its Midwest-based USF Holland unit, which the company said last June would expand into the Northeast. That followed the closure of USF’s Red Star unit in the Northeast, which the company attributed to a one-day Teamsters strike.