updated 2/28/2005 8:00:06 AM ET 2005-02-28T13:00:06

Trucking company Yellow Roadway Corp. has agreed to buy rival USF Corp. in a deal worth about $1.37 billion in cash and stock, the two companies announced.

The deal announced Sunday has been unanimously approved by the boards of both companies. It also requires Yellow to assume an expected $99 million in USF debt. The acquisition is expected to close this summer.

The new company will have estimated annual revenue of more than $9 billion, more than 70,000 employees and 1,000 service locations, according to a news release announcing the deal.

Representatives from Yellow and USF did not immediately return calls from The Associated Press.

The proposed acquisition values each USF share at $45, a 16 percent premium to USF’s Friday closing price of $38.82 on the Nasdaq Stock Market.

The cash portion of the deal is $639 million, with the remainder to be paid for with Yellow’s common stock. Each USF share will be valued at nine-tenths of one share of Yellow. Yellow’s shares closed Friday at $61.31, up 8 cents on the Nasdaq.

The companies said the transaction is expected to result in savings of about $40 million in the first year and long-term savings of at least $150 million. The announcement did not discuss the possibility of layoffs.

If it is approved by the two companies’ shareholders, it would be the second major acquisition for Yellow in the last 1½ years. Overland Park-Kan. based-Yellow Corp. essentially doubled its size when it merged with competitor Roadway Corp. in late 2003.

After that acquisition, Yellow became the nation’s revenue leader among trucking companies specializing in carrying less than a truckload, or LTL.

Yellow reported 2004 earnings of $184.2 million on $6.8 billion in revenue, compared with 2003 income of $40.7 million on $3.07 billion in revenue. Yellow’s stock price has increased 89 percent in the past year.

On the other hand, Chicago-based USF has been hurt in recent years by Teamsters strikes and declining business as well as the resignation in November of its chairman and CEO, Richard DiStasio.

The company reported earnings fell about 44 percent to $23.8 million on $2.4 billion in revenue in 2004, down from net income of $42.3 million on $2.3 billion in revenue in 2003.

Teamsters President Jim Hoffa said Sunday that the union will do everything it can to protect its members’ jobs.

“Our members at both companies can rest assured that we will do everything it takes to protect their job security and their livelihoods,” Hoffa said in a prepared statement. “We will carefully monitor the pending deal and do our own analysis so that our members’ interests are protected.”

Hoffa and Tyson Johnson, the Teamsters’ freight division director, are scheduled to meet soon with CEOs of both companies to discuss the deal.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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