Yellow, Roadway will be separate brands after sale

Jul 8, 2003 12:00 PM

Yellow Corp. and Roadway Corp. will continue to operate as separate brands, though they announced today they would merge into one holding company.

Yellow announced today it would purchase Roadway in a deal that will be worth $1.1 billion. Yellow chairman, president & CEO Bill Zollars will assume the same role with Yellow-Roadway Corp. James D. Staley, currently president & CEO of Roadway, will continue to lead Roadway, which will be an operating entity of the merged holding company.

"We feel it's the right strategy, the right partner, the right brands and the right time," Zollars said. "It's always better to do things like this when you really don't have to."

During a conference call for investors today, Staley said the merger will give Roadway's customers more opportunities than ever, and added that there is only about a 30% customer overlap between the carriers.

Zollars added that the timing of the National Master Freight Agreement, which was renewed by the International Brotherhood of Teamsters in March, also came into play. Zollard said he spoke with Teamsters president James P. Hoffa before the conference call, and that Hoffa was "positive" about the development.

Zollars said during the conference call that the back-office operations of Yellow and Roadway would be merged, but the operations in the field would remain the same. He said the relationship between the two companies would be like the Pontiac and Buick brands are to GM.

Yellow-Roadway will have about 600 terminals and service centers between them. Though neither Zollars or Staley could predict what would be down the road in five years, both said they hoped to add more drivers and more terminals in the future.

Zollars said approval for the merger by the government is the only "tall tadpole in the process." However, Satish Jindel, president of Pittsburgh-based transportation consulting firm SJ Consulting, told Fleet Owner he doesn't see that as much of a problem, as there remains too much capacity in the LTL industry.

According to Zollars, Yellow is running at about 90% capacity. Staley said that Roadway's capacity is similar.

Zollars said he expects the deal to be completed by the end of the year.