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YRC Expects Jiayu Buy to Cost $40M-$50M
Monday September 10, 11:53 am ET

YRC Worldwide CEO Expects Jiayu Acquisition to Cost $40M-$50M, Sees Bleak U.S. Economy

NEW YORK (AP) -- The president and chief executive of trucking company YRC Worldwide Inc. on Monday said he expects the acquisition of Shanghai Jiayu Logistics Ltd., one of the largest less-than-truckload carriers in China, to cost between $40 million and $50 million.

Speaking at the Wachovia Global Transportation and Packaging Conference, Bill Zollars said the exact cost and other factors of the deal are still being negotiated...

Zollars said he continues to believe the U.S. economy is worse that people realize, and reiterated his plea for the Federal Reserve to cut interest rates to avoid further deterioration.

Current economic conditions are affecting demand, Zollars said. He noted the pre-holiday peak in business has yet to materialize. And he doesn't expect things to get better soon.

"We're not going to plan for the economy to recover," Zollars said. "We're going to assume that things are going to continue as they are...It doesn't feel like we've hit the bottom right now."

The stock price has been dropping down to what looks like a bargain valuation compared to where the shares have been over the last few years. However earnings have also been falling as weaker demand is taking a toll on margins and on revenue growth.

These comments by CEO Zollars show that profits may well continue to be under pressure for the foreseeable future. What is a possible trough valuation? I don't know. YRCW now has a hefty debt load from the acquisitions of other trucking companies and also has to compete with players like FedEx for business...

JT :-)
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