Shares of Ryder System Inc. jumped 17% on May 13 after an investment firm that owns nearly 10% of the transportation and logistics giant offered to buy the company’s remaining shares for 20% more than where they had closed the day before.
In a letter to the board of Miami-based Ryder, HG Vora Capital Management's founder and portfolio manager, Parag Vora, said he and his team have taken note of Ryder’s push in recent years to focus more on returns than growth as well as its increased focus on asset-light businesses. Vora added that he and his HG Vora colleagues “value the management team’s acumen and deep experience” and want to take Ryder private to create more value.
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New York-based HG Vora’s offer proposes to pay $86 in cash for each Ryder share the firm doesn’t already own, totaling a shade under $4 billion in all. HG Vora owned 3 million Ryder shares at the end of last year and, from mid-March to mid-April, snapped up another 2 million shares as they tumbled in value from nearly $84 to $64. The firm has paid an average of roughly $78.50 for its shares.
“We anticipate funding the purchase price with capital provided by funds managed by HG Vora and an alternative investment manager with over $250 billion in assets, as well as certain other lender commitments,” Vora wrote without naming the funding partners he has lined up.
After closing May 12 at $71.48, Ryder stock (Ticker: R) ended Friday trading at $83.65 after popping on word of HG Vora’s bid.
The board of directors of Ryder (No. 3 on the FleetOwner 500: For-Hire list) confirmed it had received the offer and “will carefully review and evaluate the indication of interest.” Ryder late last month reported first-quarter profits of nearly $176 million (versus about $50 million in the prior-year period) as revenues climbed 28% to nearly $2.9 billion. The company’s dedicated transportation division produced segment earnings of $20.2 million on $297 million in operating revenues, up from $13 million and $237 million, respectively, in early 2021.
On a conference call held after the release of those numbers—which included a big increase in the management team’s 2022 earnings-per-share guidance—Chairman and CEO Robert Sanchez said supply chain and truck manufacturing challenges are presenting the company with growth opportunities across its business units. He also noted that the recent acquisitions of supply-chain ventures Whiplash and Midwest Warehouse & Distribution System are performing to plan and that the Ryder team is eyeing more M&A deals.
