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Air T Inc. Message Board

  • rreding1 rreding1 Jan 12, 2007 1:29 AM Flag

    Will Airt TakeThe Company Private?

    EGL Shares Jump on CEO's Buyout Bid
    Wednesday January 3, 1:27 pm ET
    EGL Shares Leap on CEO's Offer to Take Company Private; Analysts See No Competing Bids Ahead

    NEW YORK (AP) -- Shares of EGL Inc. surged on Wednesday, a day after the company's chief executive offered to take the freight forwarding company private for $36 per share, or about $1.46 billion.

    Shares of Houston-based EGL gained $8.09, or 27 percent, to $37.78 in midday trading on the Nasdaq. The stock has traded in a 52-week range of $28.57 to $53.80.

    EGL received the offer on Tuesday from James R. Crane, who as chairman and chief executive also ranks as its largest shareholder with about 18 percent of outstanding stock. General Atlantic LLC, a private equity firm, joined Crane in the bid, which represents a 21 percent premium over the closing price of EGL stock on Friday.

    Other key executives at EGL also offered backing to the deal and Crane said he could raise about $1.13 billion in debt financing from senior lending sources.

    EGL formed a special committee to review the offer and hired legal counsel. The committee also plans to hire independent financial advisers to assist in its analysis.

    Art Hatfield, an analyst at Morgan Keegan & Co., said he's confident Crane and his associates can raise the capital and close the deal, although at $36 it would be done at a discount to EGL peers Expeditors International of Washington Inc. and UTi Worldwide Inc.

    Jon A. Langenfeld, an analyst at R.W. Baird, also considers $36 the low end of a reasonable takeout range for EGL, but does not expect a competing bid since management supports Crane.

    "Further, given that forwarding is a people-intensive business, a secondary bid competing against the existing senior management team would likely be destructive to the business model," the analyst said in a research note on Wednesday.

    Todd C. Fowler, an analyst at KeyBanc Capital Markets, added that EGL does not represent an attractive strategic fit to other freight forwarders because of its exposure to the air freight markets.

    "We believe it is unlikely the company will receive any counteroffers," Fowler said in a research note.

    Shares of other names in the sector also gained ground on the news. Shares Expeditors International added $1.53, or 3.8 percent, to $42.03, while UTi Worldwide jumped $1.05, or 3.5 percent, to $30.95. Both stocks trade on the Nasdaq.

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