Acquisition of Shanghai Jiayu Logistics to cost between $40M and $50M

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. He expects the acquisition to close by the end of the year. The transaction was announced in late June.

Zollars said he expects the acquisition to be a key part of the company's growth strategy, because it allows the company to gain more exposure to the booming Asian market.

On the homefront, however, he is not as optimistic.

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."

Zollars said the outlook for the U.S. economy, although dim, is aiding the relationship between YRC and the Teamsters union, which represents a large majority of the company's employees.

"The economic environment has helped because they see us as really the only game in town as far as growth is concerned," he said.

Zollars said the company plans to begin contract negotiations with the union in the next few weeks, although the Teamster's contract doesn't expire until April 2008. He expects negotiations to be completed by the end of the year.

Shares of YRC fell 58 cents, or 2 percent, to $27.81 in midday trading. Earlier, shares hit a new 52-week low of $27.66. They have ranged from $28.18 to $47.09 over the past year.