LTL conglomerate Roadway Corp. plans to sell its Arnold Transportation Services (ATS) truckload subsidiary to a group led by Michael S. Walters, ATS's president and CEO, and private equity firm Jefferies Capital Partners. Akron, OH-based Roadway said the sale, worth $55 million, should be wrapped up by the first quarter of 2003.
Roadway acquired Jacksonville, FL-based ATS in November, 2001, when it purchased trucking conglomerate Arnold Industries. That acquisition added ATS and LTL carrier New Penn Motor Express to Roadway's national operations.
However, Roadway Chairman and CEO Michael Wickham said ATS -- despite being profitable -- didn't fit well into Roadway's predominantly LTL structure. "[ATS] is a truckload carrier, and it does not fit in our strategic focus. This sale will allow us to reduce debt levels and pursue additional LTL opportunities," he said.
ATS, which specializes in short-haul regional operations, uses a mix of over 800 company-owned tractors, 500 owner-operators and 4,200 trailers to provide service in the Northeast, Southeast, Midwest and Southwest regions of the U.S.
The sale comes at a time of healthy financial results for Roadway. Revenues from all of its LTL and truckload operations increased 14.2% in the third quarter this year to over $721 million compared to the same period last year, though net income slipped 15% to just over $6.93 million. Wickham noted that with the bankruptcy and closure of Consolidated Freightways in September, Roadway was on track to see a 25% to 30% revenue increase in the fourth quarter this year.