YRC shrs rise, options surge on takeover talk

YRC Worldwide Inc's shares rose as much as 8.7 percent and its options volumes surged on Tuesday on talk the U.S. trucking company was a takeover target.

YRC shares are up on speculation that German mail and logistics group Deutsche Post AG has made a $41 bid for North America's largest trucking company, said Paul Foster, options strategist at Web information site theflyonthewall.com in Chicago.

A YRC spokeswoman said the Overland Park, Kansas-based company does not comment on rumor and speculation.

Talk of Deutsche Post's interest in Christian Salvesen Plc also was helping boost the shares of the British logistics group, which said Tuesday it had received bid approaches from two parties.

Deutsche Post was not immediately available to comment, but earlier had declined to address the reports on the British firm. The company said in April it might make further acquisitions.

YRC has been the subject of takeover speculation earlier this year.

"The strength in YRC Worldwide shares is being attributed to renewed takeover chatter," said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.

"In the past, there has been talk that more consolidation will occur in this industry," he added.

The U.S. trucking sector has been languishing for the last 12 months, as retailers scaled back inventory and the U.S. economy slowed. The term "freight recession" is one that has been used frequently in the industry this year.

This year, continued economic softness -- and anemic consumer sales -- pose a direct threat to freight volumes. Trucking companies also invested heavily in new trucks in 2006 to avoid tough new emission standards this year, leading to over-capacity and lower prices.

The speculation also spurred an increase in upside call activity as 24,358 calls compared to 3,834 puts traded in YRC early in the session, according to market research firm Track Data, indicating some investors expected further strength in the stock.

The October call options giving the right to buy YRC shares at $30 and $35 apiece were the busiest series with volume of 7,245 and 9,185 contracts respectively.

The premiums for those calls were elevated. The October $30 calls last traded at $1.40 a contract and the October $35 calls fetched 45 cents a contract.

Foster noted YRC's October option implied volatility, a measure of the expected magnitude of share price movements, shot up to 45 percent, above its 26-week average of 34, according to Track Data. That suggests greater risk of price swings, he said.

YRC's stock rose as high as $30.20 and was still up $2.06, or 6.7 percent, at $29.66 in midday trading on the Nasdaq.