YRC Worldwide Wants to Acquire Arkansas Best

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Looks like Jonah wants to swallow the whale.

On Thursday, YRC Worldwide (NASDAQ: YRCW  ) , a troubled trucker with a market capitalization shy of $120 million, announced plans to buy rival Arkansas Best Corporation (NASDAQ: ARCB  ) , a company more than three times its size.

Arkansas Best President and Chief Executive Officer Judy McReynolds declined to enter into talks with YRC on the proposal, having been told by her board of directors that the "timing was not right." But YRC is not dissuaded.

In a press release revealing the goings-on today, YRC's own CEO, James Welch, confirmed: "Our board and management believed then and believes now that the combination of Arkansas Best and YRCW would be in the best interests of all employees, customers and shareholders of both companies. We remain committed to continuing the great strides we have made at YRCW" -- and apparently, committed, too, to pursuing a merger between the two companies.

Viewed from one angle, YRC's bid seems strange given the disconnect between the two companies' market caps. However, when evaluated from the size of their businesses, the plan makes more sense. If YRC is smaller than Arkansas Best in terms of its value to investors, it's more than twice as big in terms of its revenues. Last year, YRC booked $4.8 billion in revenue; YRC, only $2.2 billion.

Shares of YRC are up 1.1% on today's news. Arkansas Best shareholders, in contrast, anticipating a purchase at a premium, are seeing their shares rise 8.4%, to roughly $16.64.

Read/Post Comments (3) | Recommend This Article (9)

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  • Report this Comment On May 09, 2013, at 8:50 PM, hacklefty wrote:

    YRC just emerged from a defacto bankruptcy and posted its first quarterly profit since 2007. Not sure how they could purchase ABF.

  • Report this Comment On May 12, 2013, at 9:43 PM, tagmaster wrote:

    YRC gets a much better deal than it did on USF(-700,000 after 1yr.) Agreements with the Teamsters does not restrict YRC from continuing to make questionable purchases however with two Teamster members/representatives on the board of directors some stupidity may subside in that regard.

    The logic that all the erroneous lawsuits absolve is a big plus too. Without approval from the court. It can't undergo a major expansion, either? Does not

    apply here Yrc never filed BK

  • Report this Comment On June 21, 2013, at 8:45 AM, B1GR3D wrote:

    So here is how YRC buys companies. They make any deal they can, say a giving the company they are purchasing YRC stock in the amount of the purchase. Then the company they purchased loses the amount of the purchase price in the first few quarters. YRC writes it off, sells off the assets, lays off the workers and continues on its path to oblivion. You don't need money to buy large companies in big business just idiots like Jim Staley to believe the hogwash you are peddling. Roadway was making millions per quarter right up unitl Yellow talked them into merging for the very same reasons they gave ABF. Good for ABF not to take the deal; they would not survive it.

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Related Tickers

9/27/2016 4:00 PM
ARCB $18.70 Down -0.11 -0.58%
ArcBest CAPS Rating: **
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YRC Worldwide CAPS Rating: *