Celadon seeks takeover of USA Truck

Executives with Celadon Trucking Services are interested in acquiring or merging with Van Buren-based USA Truck, and have asked USA Truck management to meet about a possible transaction, according to a federal filing Celadon posted Tuesday (Oct. 11).

At risk in a possible deal would be the about 500 jobs at USA Truck’s corporate headquarters in Van Buren.

Indianapolis-based Celadon noted in its Securities & Exchange filing that it recently purchased $4.66 million in USA Truck shares, or almost 6.3% of the company.

Shares of USA Truck (NASDAQ: USAK) surged above $10 in early morning trading to settle at $9.89 in late afternoon trading. The share price was up more than 20% from the previous close of $8.21.

Shares of Celadon (NYSE: CGI) saw trading gains, with the shares up more than 4% to $9.70 in afternoon trading.

Coincidentally, the shares of both companies closed the day at $9.76. Celadon’s shares were up 46 cents for the day, and USA Truck shares were up $1.55.

“Based on publicly available information, Celadon Group believes there is an opportunity to realize value for its stockholders from this investment,” the company noted in the filing.

Continuing, the company noted: “Celadon Group’s board of directors and management team believe the truckload industry offers consolidation and other strategic opportunities as successful companies seek, among other things, additional capacity and services for customers, more diverse routes for drivers, and greater value and liquidity for investors. Celadon Group recently requested a meeting with the Issuer’s management to discuss a possible association between Celadon Group and the Issuer, potentially including a combination of the two companies.”

Celadon made seven purchases of USA Truck shares beginning Sept. 20 with a block of 475,000 shares purchased at $6.98 per share. The share-buying spree ended on Oct. 5 with 4,000 shares purchased at $7.88 per share.

Cliff Beckham, president and CEO of USA Truck, declined comment. USA Truck did issue the following statement Tuesday afternoon: “USA Truck, Inc. acknowledges the Schedule 13D Celadon Group, Inc. ("Celadon") filed today. The views of our stockholders are very important to us and we carefully consider their input. Our board of directors will evaluate Celadon’s 13D filing in due course. We do not intend to comment further on this matter except as warranted by applicable laws and regulations.”

Like USA Truck, Celadon is a truckload common carrier with operations in the U.S., Canada and Mexico. However, in terms of market capitalization Celadon ($215.68 million) is more than double the size of USA Truck ($100.81 million).

Also, Celadon has better weathered the national freight recession that began in late 2006 and has only slightly improved in the past year. Following are revenue and income comparisons for the previous three financial years for each company.

Celadon — Total revenue
FY 2011: $556.694 million
FY 2010: $523.492 million
FY 2009: $490.338 million

Celadon — Net income
FY 2011: $14.7 million
FY 2010: $4.7 million
FY 2009: $2.6 million

USA Truck — Total revenue
2010: $460.161 million
2009: $382.368 million
2008: $535.620 million

USA Truck — Net income
2010: -$3.308 million
2009: -$7.177 million
2008: $3.14 million

If USA Truck is acquired by Celadon it would leave Arkansas Best Corp. as the only publicly held company based in the Fort Smith region.

Just a few years ago, the region was home to four publicly held companies, including Baldor Electric and Beverly Enterprises. Beverly became a private company in 2006 following a $1.8 billion buyout by San Francisco-based Fillmore Capital Partners. The equity firm changed the name to Golden Living.

In early 2011 Zurich, Switzerland-based ABB bought Baldor in a $4.2 billion deal.