Trucking Speculation Turns to FedEx, American Freightways Competitors.NOW THAT FEDEX Fed·Ex
A trademark used for an express shipping service. This trademark often occurs in print in lowercase as a noun or verb: Corp. of Memphis has announced the $1.2 billion acquisition of American Freightways American Freightways (AF) was a U.S. Less Than Truckload (LTL) shipping company.
Founded in 1982 by the late Sheridan Garrison, American Freightways was originally titled Arkansas Freightways. Corp. of Harrison, can it be true that United Parcel Service United Parcel Service, Inc. (NYSE: UPS), commonly referred to as UPS, is the world's largest package delivery company, delivering more than 15 million packages a day to 6.1 million customers in over 200 countries and territories around the world. could snatch up Verb 1. snatch up - to grasp hastily or eagerly; "Before I could stop him the dog snatched the ham bone"
clutch, prehend, seize - take hold of; grab; "The sales clerk quickly seized the money on the counter"; "She clutched her purse"; "The Arkansas Best Corp.?
"We could see an acquisition...by UPS," said Dan Moore, an analyst who covers the trucking industry for Stephens Inc. of Little Rock. "The factor weighing against that is UPS already has an established [ground-based] network."
Moore speculated that Arkansas Best, the parent company of ABF ABF Arbetarnas BildningsFörbund
ABF American Breakfast (Thailand Hotels)
ABF Associated British Foods plc (London, UK)
ABF Association des Bibliothecaires Francais (French) Freight System Inc. of Fort Smith and one of the biggest less-than-truckload carriers in the nation, could be the prime target for UPS.
Moore said he had heard rumors that UPS had talked to Arkansas Best in the past. David Humphrey David Humphrey is an American actor/comedian that played Frankie in the play of Forever Plaid He is most well known for being the voice of Shadow the Hedgehog in the Sonic games. Many fans say that the tone of his voice fit Shadow's appearance and personality. , director of investor relations Investor relations
The process by which the corporation communicates with its investors. for Arkansas Best, would not comment on speculation that UPS might target the company.
UPS spokeswoman Susan Rosenberg said, "We continuously look at opportunities that may come our way and how they are part of our long-term direction for the company. There isn't anything specific to report despite the fact that one of our competitors is expanding their ground infrastructure. This follows other moves on the ground that they have made, frankly to mirror the integrated network A network that supports both data and voice and/or different networking protocols. See converged network and new public network. that UPS already has."
But Peter Coleman This article is about the Australian politician. For the governor of American Samoa, see Peter Tali Coleman.
(William) Peter Coleman (born 15 December 1928) is a former Australian politician and journalist. , an analyst for Banc of America Securities, said he didn't think UPS would be making an acquisition of an LTL LTL - Linear Temporal Logic freight business just to counter FedEx.
"[UPS] is working on growing their logistics business, and they are working on growing internationally," Coleman said. "I just don't think they're looking on embarking on that type of acquisition.
And he said he didn't think many customers of UPS were screaming for them to get into the LTL business.
Still, Moore said that if Arkansas Best wasn't the main target, the other top less-than-truckload freight businesses that could be targets are US Freightways Corp. of Rosemonet, Ill., and CNF CNF Configuration (File Name Extension)
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CNF Chin National Front (Burma)
CNF Canadian Nature Federation
CNF Cornell NanoScale Facility Transportation of Palo Alto Palo Alto, city, California
Palo Alto (păl`ō ăl`tō), city (1990 pop. 55,900), Santa Clara co., W Calif.; inc. 1894. Although primarily residential, Palo Alto has aerospace, electronics, and advanced research industries. , Calif., which is the parent company of Con-Way Transportation Services of Ann Arbor Ann Arbor, city (1990 pop. 109,592), seat of Washtenaw co., S Mich., on the Huron River; inc. 1851. It is a research and educational center, with a large number of government and industrial research and development firms, many in high-technology fields such as , Mich.
"I don't expect UPS to make an acquisition of a dog company, and that's all that remains other than those three," Moore said. "It would probably make more sense to go with the highest-quality name in the group that provides the best fit, which in my mind would be Arkansas Best."
Arkansas Best could be looking to unload some of its debt. In September, Arkansas Best announced that its subsidiary, Treadco Inc., had entered into a joint venture agreement with Goodyear Tire and Rubber Co.
"It appears that [Treadco] would be sold off after the first of the year [for $72.5 million]," Moore said.
With $185 million debt on its balance sheet, Arkansas Best could take the money from the sale of Treadco and pay down the debt, he said.
"So the company, in effect, would be even more attractive," he said.
Also, Arkansas Best is a union shop, just like UPS. Moore said he scratched Con-Way off the list of potential targets because it is a non-union shop. Nor is Con-Way Transportation's business model easily integrated into a company like FedEx or UPS. Con-Way tends to be more autonomous, comprising several regional companies to make a national network.
US Freightways is much the same, except it is about 35 percent unionized.
"[US Freightways] has lots of moving parts to it," including a truckload carrier company, Moore said.
"When I look at Arkansas Best, I get a little more intrigued in pairing those two up," Moore said.
Last week, FedEx announced that it was buying American Freightways for $950 million in cash and stock and that it would pick up the company's $250 million in outstanding debt.
Moore said FedEx's decision to buy AF was a move to catch up with UPS. The acquisition will allow Memphis based FedEx, which is also the parent company of Viking Freight, to expand its next-day regional LTL freight service to 48 states.
FedEx said it would pay AF $28.13 per share, a 61 percent premium over the price at the close of the market Nov. 10, which was $17.50.
After the announcement, other LTL companies saw their stock prices rise. Arkansas Best surged $1.19 to $17.88, US Freightways swelled $1.56 to $26.25, and CNF Transportation rose 56 cents to $28.88.
Moore said AF's $28.13-per-share price should send a signal to the market that the LTL stocks are undervalued Undervalued
A stock or other security that is trading below its true value.
The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. .
Industry experts say the regional LTL market will expand by nearly 10 percent every year through 2004, according to a FedEx news release.
"The American Freightways acquisition also fits into the FedEx business strategy, with companies that operate independently, focused on distinct market segments, yet compete collectively as a single-source provider for all transportation, logistics and e-commerce needs," Frederick W. Smith
Frederick Wallace Smith (born August 11, 1944), or Fred Smith, is the founder, chairman, president, and CEO of FedEx, originally known as Federal Express, the , chairman, president and chief executive officer of FedEx, said in a statement. "We believe this business model offers superior benefits without the inherent tradeoffs of a one-size-fits-all approach."
Sheridan Garrison, chairman and founder of AF, said in a statement that the deal was good for shareholders, employees and customers.
He said shareholders would receive an excellent price on the stock. The 17,000 employees have greater opportunities with FedEx, and customers benefit from the combination of AF and Viking, which creates an LTL network that provides next-day or second-day service within regions. Viking operated mainly in the West, and AF shipped freight in the Midwest, South and Northeast.
Garrison will become a member of FedEx's board of directors and will serve as chairman emeritus and founder of American Freightways.
Tom Garrison will remain as president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of AF but will report to Douglas G. Duncan, who will become president and CEO of a new FedEx LTL freight division.
Both Viking and AF will operate independently under their own brand names.
The deal won't affect other publicly traded trucking firms in Arkansas, such as J.B. Hunt Transport Services Inc. of Lowell, because they are full truckload carriers instead of LTLs, which transport the freight of several companies inside one trailer within a certain region.
Arkansas Best's Humphrey said he would wait and see what the impact of the acquisition would be on Arkansas Best.
"It's hard to say if there's going to be any impact at all," he said. "It doesn't appear to be that much change."