Trucking Company Yellow to Buy Leading Rival Roadway

Trucking company Yellow Corp. said Tuesday that it would buy leading rival Roadway Corp. for $966 million in a bid to create one of the world’s largest shipping companies.

Yellow, the No. 1 U.S. shared-loads trucker, said it would pay $48 a share for No. 2 Roadway, half in stock and half in cash.

Yellow, which has been expanding its transport businesses over the last half a dozen years, also will assume $140 million in Roadway debt.

The merged company would be named Yellow-Roadway Corp. and would have more than $6 billion in revenue, or about 15% of the $38-billion U.S. market for shared-loads freight transport.

Shares of Akron, Ohio-based Roadway jumped 54%, or $16.08, to $46.10 in Nasdaq trading and led a broad rally in trucking stocks. Shares of Overland Park, Kan.-based Yellow fell 5%, or $1.24, to $23.25, also on Nasdaq.

The combination would solidify Yellow’s top spot among less-than-truckload, or LTL, carriers, which transport cargoes for two or more customers on the same vehicle and operate a network of terminals. Unlike full-load truckers, which carry cargoes for one customer at a time and have seen improving earnings, LTL carriers have had spotty results in recent months.

Yellow Chief Executive Bill Zollars said the planned merger would allow the companies to cut yearly costs by $45 million within two years and by more than $125 million after five years.

Zollars sees little opposition from government regulators or the Teamsters union, which represents thousands of drivers and terminal workers at both firms. The companies in February reached five-year labor contracts with the Teamsters.

Separately, Roadway said Tuesday that its second-quarter profit rose to $6.3 million, or 33 cents a share, from $5.7 million, or 30 cents, a year earlier.

Roadway CEO Jim Staley is expected to continue running the company after the merger.