OVERLAND PARK, Kan. (Mar. 1, 2005) — Consolidation continues in the U.S. LTL market as one of the world’s largest carriers announced it plans on getting much bigger.

Overland Park, Kan. based-Yellow Roadway Corp. says it has agreed to buy USF Corp. for $1.37 billion.

USF Corp. is the holding firm for a $2.4 billion group of companies specializing in regional and national LTL freight transportation, premium truckload freight, and distribution and logistics. Its carriers moved more than 20 billion pounds of freight last year, reaching points all over the U.S., Mexico and Canada.

Yellow — which almost doubled in size when it acquired rival Roadway Corp. in a blockbuster deal in late 2003 — is expected to fork over $639 million in cash, with the remainder to be paid with Yellow’s common stock. The deal is said to strengthen the carrier’s firm grip in regional and next-day service, while also expanding national and international operations.

The acquisition — which was unanimously approved by the boards of both companies on Sunday and expected to close this summer — also requires Yellow to assume about $99 million in USF debt.

In a joint statement, the companies said the transaction would have annual revenue in excess of $9 billion, with over 70,000 employees and 1,000 service locations. The combined companies will offer a broad range of transportation services including next day, inter-regional, national and international capabilities. The deal is also expected to result in savings of about $40 million in the first year and long-term savings of at least $150 million.

While labour issues are still being worked out, the following executives will lead company divisions and report directly to Bill Zollars, chairman, president and CEO of Yellow Roadway:

— Jim Staley, current president of the Roadway Group, will become president of the Yellow Roadway regional companies which will include New Penn Motor Express, USF Holland, USF Reddaway, USF Dugan and USF Bestway. Staley will also be responsible for the truckload unit of USF, Glen Moore.

–Bob Stull, who currently reports to Jim Staley as president of Roadway Express, will continue in that role and report directly to Zollars.

–James Welch, president of Yellow Transportation, will continue in that role, while Jim Ritchie will continue as president of Meridian IQ, the logistics unit of Yellow Roadway, which will include the operations of USF Logistics.

— Mike Smid will remain as president of Yellow Roadway Enterprise Services and chief integration officer.

In a conference call with media, Zollars compared the similarities between this deal and the Roadway merger. However, there is virtually no customer overlap between Yellow and USF, as was the case with Yellow and Roadway, Associated Press reports Zollars as saying.

The acquisition further consolidates the unionized LTL sector of the U.S. trucking industry, which was once dominated by the International Brotherhood of Teamsters.

The Teamsters, which issued a brief release noting their concern over a possible merger last week, posted a release that said it will do everything it can to protect the job security of its members.

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

— with files from Associated Press