Intense Competition Unfolds Over Yellow Corp.'s Terminals Amid Bankruptcy Proceedings

The race to acquire Yellow Corp.'s 169 terminals has ignited as the Nashville-based less-than-truckload (LTL) carrier navigates bankruptcy proceedings. This pivotal moment in the trucking industry's landscape has sparked substantial interest, with industry experts anticipating a forthcoming auction that could draw additional contenders beyond those that have already expressed interest.

Yellow, a nationwide carrier, initiated its bankruptcy court protection on August 6, a move considered highly significant by industry analysts. Almost immediately, two LTL competitors threw their hats in the ring with consecutive stalking horse bids.

On August 17, Estes Express Lines proposed a $1.3 billion bid for the terminals, only to be outdone on August 18 by Old Dominion Freight Line's $1.5 billion offer. These initial bids, known as stalking horse bids, establish the starting point for future bids, preventing others from undercutting the purchase price.

Notably, both Estes and Old Dominion's bids present formidable hurdles for potential competitors to join the process. This intense competition may prompt the bankruptcy proceedings team to consider selling the terminals in smaller batches to maximize value, rather than an outright sale to a single entity.

Old Dominion Freight Line holds the No. 10 spot on the list of the largest for-hire carriers in North America according to the Transport Topics Top 100 list. Similarly, Yellow and Estes hold the No. 13 and No. 14 positions. In the realm of less-than-truckload carriers, the three companies hold ranks of 2nd, 3rd, and 5th respectively, showcasing their prominence within the industry.

While Estes aimed for a cost-effective advantage with its initial stalking horse bid, it is notable that Richmond-based Estes will not be providing a $230 million loan to keep Yellow operational during asset liquidation. Instead, MFN Partners, the largest shareholder, will collaborate with Citadel Credit Master Fund to extend a combined $142.5 million financing.

Industry experts view this bankruptcy as a turning point in the LTL sector's history, with positive impacts expected on profit margins and pricing. The implications of the terminal sale could mirror the effects of the 2002 Consolidated Freightways bankruptcy.

As this high-stakes contest unfolds, industry analysts speculate that additional players such as LTL carrier Saia Inc. and XPO Inc. might enter the auction. However, XPO, ranked 5th on TT's Top 100 list and 4th in LTL rankings, declined to comment. The terminals under consideration, while among the oldest, are strategically located and prime for expansion.

Ultimately, this bankruptcy's outcome holds considerable significance, as it is likely to shape the competitive dynamics within the LTL industry for the foreseeable future.