HOUSTON, Dec. 15 /PRNewswire/ -- Eagle USA Airfreight, Inc.
(Nasdaq: EUSA), 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 http://www.eagleusa.com . For more
information about Fastair and CTI, visit http://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
http://www.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
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Related links:
http://www.eagleusa.com
CONTACT:
Elijio V. Serrano, Chief Financial Officer,
281-618-3665, or Mike Slaughter, Vice-President, Investor
Relations, 281-618-3428, both of Eagle USA
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