Truckload carrier Western Express plans to buy Smithway Motor Xpress Corp. for $54 million. This will include the assumption of Smithway’s $90 million in debt, by this summer if all closing conditions, including approval by the stockholders at both companies, are met.
Western, a $300-million carrier founded in 1881, hopes to use the acquisition to further expand its national dry van operation while gaining entry into new markets via Smithway’s flatbed division, said Wayne Wise, Western’s chairman, president & CEO.
“Western has a history of growing through strategic acquisitions, and the acquisition of Smithway would be the next chapter in Western’s growth story,” said Wise. “The combination of our two companies would place us in the top 15 truckload carriers measured by revenue, creating more opportunity for our combined customer, employee and driver bases.”
The deal is structured as a merger, whereby Smithway will become a wholly owned subsidiary of Western, he added.
On a combined basis, the companies would operate approximately 1,600 tractors in dry van operations and 1,400 tractors in flatbed operations. He added that Smithway’s senior management team and employees are expected to remain at Smithway and play integral roles in delivering the companies’ combined services to the truckload market.
The buyout comes not a moment too soon for Smithway, which has struggled over the last several years to stay profitable. In the fourth quarter last year, Smithway lost $42,000 due to litigation losses, while operating revenue dropped 11.7% to $51.2 million compared to the fourth quarter in 2005. For all of 2006, the picture was much brighter as Smithway bagged $4.3 million in profits on revenues of $228.8 million, up from profits of $4.2 million and revenues of $220.4 million in 2005.