Rumored CF-Yellow Deal Falls Through
There was plenty of speculation about that as Consolidated Freightways, Menlo Park, Calif., the nations third-largest LTL fleet, confirmed that it had been engaged in discussions with a third party rumored to be Yellow Freight System concerning a possible business combination.
These discussions were terminated without any agreement being reached, the company said.
Talk of a possible merger between CF and Yellow Freight the nations second-largest LTL carrier ignited trading in Consolidated Freightways stock last week. Nearly 1.5 million shares changed hands Dec. 16, 10 times the normal volume, leading to the companys announcement later that day. The stock topped out at $17.75 a share Dec. 16, up from $15.75 Friday and $14 the week before.
Over the past year, Yellow Freight has added time-definite delivery services and focused on expanding its international freight activities.
Yellow Freights parent, Overland Park, Kan.-based Yellow Corp., expanded its nonunion LTL business with the recent acquisition of Action Express. Earlier, the company sold Preston Trucking Co., a unionized LTL carrier with operations in the Midwest, Northeast and Mid-Atlantic, to Prestons management.
The merger of two large unionized LTL carriers has been tried before, but with disastrous results. In 1995, Arkansas Best Corp. attempted to combine the operations of Carolina Freight Carriers Corp. with ABF Freight System. The result was multi-million dollar losses for several years and practically no net gain in freight volume.
Conventional wisdom is that you cant put together to major network carriers, said Paul Schlesinger, a trucking industry analyst for Donaldson, Lufkin & Jenrette, New York. Its very difficult. Its very risky. And its very disruptive for employees and customers. I think the odds are against the successful integration, or even common ownership, of national network carriers.
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