Celadon Group Inc. has reported buying a 6.3 percent stake in USA Truck Inc. and proposing talks on a possible merger with the like-minded truckload carrier.
No discussions have been held so far with Van Buren, Ark.-based USA Truck, Celadon said Tuesday in a regulatory filing. Indianapolis-based Celadon requested a meeting to discuss an “association” between the two companies including a potential combination, according to the filing.
In trading Tuesday morning, USA Truck climbed 19 percent to $9.77 at 11:27 a.m. in New York after gaining as much as 24 percent, the largest intraday advance since July 2008. Celadon gained 4.5 percent to $9.72.
Acquisitions among transportation companies are more likely after “sharp declines” in equity prices, Jason Seidl, a New York-based analyst with Dahlman Rose & Co., wrote in a note last week. He listed Celadon among companies with “an external growth approach,” along with Knight Transportation Inc. and CH Robinson Worldwide Inc.
Celadon and USA Truck are both so-called truckload carriers, delivering goods for a single customer in each trailer. Celadon has a market value of about $219 million, more than double USA Truck’s $101 million, Bloomberg data shows.
USA Truck was “trading at 55 percent of book,” Celadon Chief Operating Officer Paul Will said by telephone. “That gave us the opportunity to hopefully have a dialogue with management to see if there’s some opportunity between the two companies.”
Celadon paid $4.66 million including commissions for its stake, becoming USA Truck’s seventh-biggest investor, according to Bloomberg data. Celadon posted revenue of $557 million in the fiscal year through June 2011, while USA Truck had sales of $504 million in the same period.
USA Truck specializes in commodities, according to its website. Chief Financial Officer Darron Ming didn’t immediately respond to a voice mail seeking comment.