by Lance Turner
Posted 5/9/2013 07:43 am
Updated 1 year ago
In filing Thursday with the U.S. Securities and Exchange Commission, Arkansas Best Corp. of Fort Smith said it had rebuffed a takeover offer by rival YRC Worldwide Inc. of Overland Park, Kan.
The report said YRC CEO James L. Welch met with Arkansas Best President and CEO Judy McReynolds March 22 at Arkansas Best's Fort Smith headquarters "to discuss a possible business combination."
In a statement to DC Velocity, Arkansas Best said YRC was interested in an acqusition of Arkansas Best's largest subsidary, ABF Freight System Inc., which accounts for about 80 percent of Arkansas Best's business.
In its filing with the SEC, Arkansas Best acknowledged the talks and that "in early April, ABC advised YRC that ABF was highly focused on its ongoing labor negotiations as well as other strategic and operational initiatives and that considering a transaction with YRC was not appropriate at that time."
Arkansas Best said it "has not engaged in any subsequent discussions with YRC."
Unions, Costs & Recession
Since 2010, Arkansas Best and YRC have been waging legal battles over concessions YRC granted to union workers who are members the International Brotherhood of Teamsters.
ABF has said that YRC and the Teamsters violated the National Master Frieght Agreement in 2009 and 2010 by entering into "concessionary side agreements with YRC Companies to the exclusion of ABF and other companies signatory to the NMFA."
Those concessions played a big role in the survival of YRC, which narrowly avoided bankruptcy in 2009.
Meanwhile, Arkansas Best has struggled to bounce back from the recession and contain costs tied to its own labor force, which includes 7,500 Teamster employees across the United States. Since December, Arkansas Best has been negotiating with the Teamsters, seeking a single labor contract to help "lower expenses" through uniformity in cost structure, time off, scheduling and benefits.
Last week, ABF Freight announced it had reached a tentative contract agreement with the union.
In its most recent quarterly earnings report, Arkansas Best said ABF Freight's results were weighed down by its "high-cost structure," underscoring "the need for a more rational labor agreement that reflects the increasingly competitive [less-than-truckload] industry.
In all, the company reported a first-quarter net loss of $13.4 million or 52 cents per share on revenue of $520.7 million, up from $440.9 million in the same quarter last year.