FedEx to Buy LTL Carrier Watkins Motor Lines
FedEx Corp. has agreed to acquire the less-than-truckload operations of Watkins Motor Lines and certain affiliates for $780 million in cash. The deal, announced May 26, gives FedEx complementary offerings in the LTL sector.
With $1 billion in annual revenue, Watkins Motor Lines, Lakeland, FL, is the country's largest privately held nationwide long-haul LTL carrier. Watkins Motor Lines is a subsidiary of Watkins Associated Industries.
Known for its premium on-time service, the company has about 10,000 workers and is one of a few trucking companies to be consistently profitable since obtaining its transcontinental LTL operating authority in 1972. It has 139 locations in 42 states and Puerto Rico.
Within FedEx Corp., the FedEx Freight segment has annual revenue of $3.5 billion. FedEx Freight is a leading U.S. provider of regional next-day, second-day and interregional LTL freight services.
LTL carriers transport small shipments that do not qualify for full truckload rates. A LTL shipment typically refers to shipments of 150 to 10,000 pounds.
FedEx, Memphis, TN, said heavyweight freight customers will benefit from the added choice that this new, cost-effective solution will bring to the FedEx Freight portfolio of services.
Watkins will be rebranded FedEx National LTL and operate as a separate network in the FedEx Freight segment. The transaction is to close in the first quarter of fiscal 2007 and is subject to customary conditions, including government approvals. The acquisition is not expected to have a material effect on the fiscal 2007 financial results of FedEx.
FedEx Freight and Watkins have complementary offerings. For example, adding Watkins' three-day or more long-haul service to FedEx Freight's next-day and second-day regional LTL freight services will extend FedEx's leadership position in the freight sector, FedEx said. Together, FedEx Freight and Watkins will form a well-rounded LTL transportation solution.
"Our customers have increasingly asked us to provide a broader range of transportation and supply chain services, and as a result of this acquisition, we will be in a better position to meet their expectations," Frederick W. Smith, FedEx chairman/president/CEO, said in a statement.
FedEx also agreed to acquire the assets of Watkins' business in Canada, Watkins Canada Express. Watkins Canada Express will be rebranded FedEx Freight Canada and will extend FedEx Freight's reach in the market.
Watkins management will stay, with Chip Watkins serving as president. He will report to Patrick L. Reed, executive vice president and chief operating officer of FedEx Freight, who has responsibility for all LTL operations in the United States.