Western Express trucking says it will buy Iowa carrier

Nashville-based truckload carrier Western Express Inc. is buying an Iowa company in a $90 million deal that will be the second such merger involving a local transportation player in recent months.

The acquisition of Fort Dodge, Iowa-based Smithway Motor Xpress Corp. should make Western one of the U.S.'s top 15 truckload carriers. It also gives the company a presence in the Midwest.



"We're excited about the prospects," said Rick Prickett, chief financial officer of Western.

More than two-thirds of Western's trucks are enclosed vans that move freight in the Southeast and Northeast. About 72 percent of Smithway's are flatbeds that run in the Midwest.

Smithway's shareholders will get $10.63 in cash for each share they own. That amounts to $54 million. The total sales price of $90 million includes Western taking on Smithway's debt, the companies said.

If the deal closes as scheduled by summer, Smithway would become a subsidiary of Western Express, which would remain a closely held company. In late 2005, though, Western made an initial filing with securities regulators for a public offering of stock. Prickett declined to comment on Western's current IPO plans but said the filing almost a year and a half ago that sought to raise as much as $90 million was delayed by a weak market for trucking stocks at the time.

Deals worth $3.9 billion

There have been lots of mergers in the trucking industry lately.

There were 32 mergers and acquisitions worth $3.9 billion announced in the United States last year, according to tracking by Bloomberg LP. That was up from 18 deals worth $3.4 billion the previous year.

Statewide, three deals worth $103 million occurred last year, including the $82 million acquisition of Nashville-based Star Transportation by Chattanooga-based Covenant Transport Inc.

"Clearly bigger is better," said Beth Franklin, Star's former chief executive officer who remains a consultant. "Margins in our industry have gotten so squeezed that you have to be large to command the buying power for fuel and equipment — to be able to stay competitive in the current rate environment."

Franklin, however, said there are signs that demand for trucking services is picking up.

Douglas C. Sandvig, chief financial officer of Smithway, said the company took Western's offer because the companies complement each other. Also, Marlys Smith, the widow of Smithway's deceased founder and former CEO William G. Smith, controls more than 50 percent of its voting stock and apparently wanted to cash in.

The combined company would operate roughly 3,000 trucks. Western was ranked the 28th-largest U.S. truckload carrier, based on 2005 revenues of $262 million by Transport Topics, an industry trade publication. Smithway was ranked No. 34, with revenues of $220 million that year. For 2006, Smithway had net earnings of $4.3 million on revenues of $228.8 million.

Smithway's stock rose $1.32 a share, closing at $10.32 in trading Friday.