Eagle Announces Agreement to Acquire Fastair Cargo Systems Ltd. and Commercial Transport International (Canada) Ltd.
HOUSTON, Dec. 15 /PRNewswire/ -- Eagle USA Airfreight, Inc. (Nasdaq: EUSA - news), the USA's largest and fastest-growing domestic heavyweight air freight forwarder, announced today that it has signed definitive purchase agreements to acquire Fastair Cargo Systems Ltd. (Fastair) and Commercial Transport International (Canada) Ltd. (CTI Canada). Together, Fastair and CTI Canada make up one of Canada's largest and fastest growing domestic and international heavyweight air and sea freight full-service freight forwarders. Both are privately-held and based in Toronto, Canada. Like Eagle, both companies are non-asset based.
Fastair has grown very rapidly to become one of the leading forwarders in the intra-Canada freight forwarding market. CTI Canada, its sister company, primarily serves the international freight forwarding market with offices coast-to-coast throughout Canada. From eight locations in Canada, both Fastair and CTI Canada serve more than 4,000 customers and have approximately 300 employees.
''These two acquisitions represent an important strategic step for Eagle as it strengthens our core North American transportation product offerings while supporting our international growth plans,'' said James R. Crane, Eagle's Chairman and Chief Executive Officer. ''We have been very impressed with the owners, management and employees of Fastair and CTI Canada for the excellent business that they have developed, including an outstanding customer base. By combining Fastair and CTI Canada with our existing operations in Canada, we can now offer our customers throughout North America a single source for all of their heavyweight transportation needs.''
Some of Eagle's expected benefits of the acquisitions are as follows:
-- Eagle can offer customers of both businesses seamless North American
transportation solutions.
-- Customers of Eagle will benefit from Fastair's strong domestic Canadian
transportation network.
-- Customers of Fastair and CTI Canada will benefit from Eagle's strong
domestic United States transportation network.
-- Eagle's Canadian terminal network increases to eight locations from
three locations.
-- Eagle's international and transborder expansion plans are accelerated.
-- The combined company will be a major force and one of the largest full
service logistics and freight forwarding companies in North America
with state-of-the-art technology.
-- The acquisitions are expected to add approximately $44 to $48 million
in gross revenues, net revenues of approximately $17 to $19 million
and operating income of approximately $5.3 to $5.8 million over the
next four quarters.
-- Results from the acquisitions are expected to immediately add to fiscal
2000 earnings per share beginning in the second quarter ending
March 31, 2000.
The majority owner of Fastair and CTI Canada, Ajay K. Virmani, together with shareholders Chris Ralphs, Raymon Lord and Dan Mills, will continue to manage the acquired companies, as well as Eagle's current Canadian operations. Eagle will also seek to retain all of the employees of Fastair and CTI Canada.
''The USA and Canada are the largest trading partners in the world today,'' said Fastair and CTI Canada President and Chief Executive Officer Ajay K. Virmani. ''The combination of Fastair and CTI Canada with Eagle offers unbeatable and significant growth and long-term opportunities to our customers, suppliers and employees. It provides Fastair and CTI Canada with the infrastructure, superior technology and financial resources needed to expand into new international markets, and enhances Eagle's leadership position in the North American forwarding market.''
Under the terms of the definitive agreement, Eagle will acquire the outstanding stock of CTI Canada and Fastair. At closing, Eagle will pay approximately $2.4 million cash for CTI Canada. For Fastair, Eagle will pay at closing approximately $19 million in cash and then approximately $4.9 million in cash payable in three equal annual installments. The agreement also contemplates additional consideration not to exceed $7.8 million (which has a present net value of approximately $6.5 million) over the next three years payable in cash and Eagle common stock if certain earnings-based goals are achieved for the combined businesses. The acquisition is subject to customary closing conditions. Closing of the acquisition is expected to occur on or about January 7, 2000.
Eagle USA Airfreight, Inc. operates under the name EGL Eagle Global Logistics. Eagle's dedication to providing superior flexibility and fewer shipping restrictions on a price competitive basis has made it a leading provider of airfreight forwarding and other transportation and logistics services. Its network of 78 terminals in eight countries features state-of-the-art information systems designed to maximize cargo management efficiency and customer satisfaction. Its fiscal 1999 revenues totaled more than $595 million. The Company's shares are traded on the Nasdaq National Market under the symbol ''EUSA''. Eagle's headquarters is in Houston, Texas. For more information about Eagle, visit www.eagleusa.com . For more information about Fastair and CTI, visit www.fastair.ca .
The statements in this press release regarding expected gross revenues, net revenues, operating income and earnings per share as a result of the acquisitions, timing of the closing of the acquisitions, benefits of the acquisitions, accelerated growth plans and other statements which are not historical facts are forward looking statements. Such statements involve risks and uncertainties, including, but not limited to, acquisition related risks, (such as integration of acquired business, retention of prior levels of business, retention of employees, diversion of management attention and unanticipated problems in an acquisition), competition, general economic conditions, and ability to manage growth and other factors detailed in the Company's filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary from those indicated.
For more information about Eagle: Visit Eagle on the Internet at eagleusa.com . Contact Eagle Investor Relations via the Internet at mslaught@eagleusa.com or by telephone at 281-618-3428, Michael Slaughter, Vice-President Investor Relations.
SOURCE: Eagle USA |
