The Business Journal of Kansas City, reported Friday that CEO Bill Zollars of Yellow Roadway Corp., Overland Park, Kan., said his company remains committed to its $1.47 billion acquisition of USF Corp.
The affirmation follows a report by Chicago-based USF that first quarter earnings will be much lower than expected.
USF announced after the market closed Wednesday it would earn 12 to 16 cents a share versus 32 cents in the same period a year ago. The consensus estimate of Thomson First Call analysts was for earnings of 38 cents a share. Yellow, the nation's largest LTL, is scheduled to close on the USF deal this summer.
Yellow Roadway and USF fleets operate under Teamster labor contracts. A completed deal will further consolidate the remaining few Teamster LTLs. Ironically, on Friday, Overnite Express, Richmond, Va., the large, non-union LTL that fought off a Teamster organizing attempt during the 1990s, raised its earning estimate for the quarter from 32 cents to 38 cents a share.
The USF news didn't sit well with investors. According to the Business Journal, at mid afternoon Friday, Yellow’s stock was trading at $54.40, down $4.74, or 8 percent, on volume of 9.9 million shares. USF stock was trading at $45.60, down $2.90, or 6 percent, on volume of 4.6 million shares.
USF said reasons for the lowered expectations included an automotive sector slowdown resulting in reduced Midwest volume, slower growth in the Northeast than anticipated and competition in the Southeast.
When the USF deal was announced on Feb. 28th, Yellow Roadway expected the combined company to have more than $9 billion in annual revenue, more than 70,000 employees and about 1,000 service locations.
Yellow Roadway was created in December 2003 when Yellow Corp. acquired Roadway Corp. for $1.05 billion. That acquisition created the clearly dominant player in the LTL industry, but the primary focus was long haul. Yellow sought to build next-day LTL business by acquiring USF’s four regional carriers: USF Holland, USF Reddaway, USF Dugan and USF Bestway. USF shut down its Northeastern operation, USF Red Star in a 2004 labor dispute.