ATLANTA (AP) _ UPS Inc., the world's biggest shipping carrier, is buying trucking firm Overnite Corp. for about $1.25 billion in cash as it continues to expand its heavy freight delivery business.
The deal announced Monday, UPS' largest single acquisition ever, follows the Atlanta-based company's decision last week to spend $24 million to build and equip five regional freight hubs at airports around the country.
The new hubs will allow UPS to ship freight weighing more than 150 pounds using more of its own planes. Similarly, the Overnite purchase will allow UPS to deliver heavy freight in its own trucks rather than contracting out that service as it has done in the past.
Last December, UPS bought Menlo Worldwide Forwarding, an air freight business in Redwood City, Calif., which has helped it expand into time-definite guarantees on heavy freight.
Shipping heavy freight has been a small percentage of UPS' overall business, but now the company is seeking to make it a bigger emphasis. Other shippers, like Memphis, Tenn.-based FedEx Corp., carry freight. UPS believes there is growth opportunity in delivering heavy freight on a time-definite basis.
Spokesman Norm Black said heavy freight is an where ``we want to be able to offer every option to our customers whatever they need.''
Under the deal announced Monday, Overnite stockholders will receive $43.25 for each Overnite share, representing a 46 percent premium to Overnite's closing price of $29.58 on Friday.
Richmond, Va.-based Overnite, which serves more than 60,000 customers throughout North America, earned $63.3 million on revenue of $1.65 billion in 2004.
UPS, formerly known as United Parcel Services Inc., said Overnite's management team will remain in place.
``Overnite is a perfect strategic fit for our company,'' UPS Chairman and Chief Executive Mike Eskew said. ``We want to offer our customers the broadest portfolio of transportation and logistics services available from a single source and this is an important capability that we needed to have.''
The deal has been approved by Overnite's board and is expected to close during the third quarter, pending regulatory clearance and shareholder acceptance.
Previously, UPS' largest purchase was Fritz Companies Inc., a San Francisco-based freight forwarder and logistics business that UPS bought for $437 million in stock in 2001.