CIRCLE MERGES WITH EGL

CIRCLE MERGES WITH EGL       Circle International Group Inc., the San Francisco-based forwarder and logistics provider, and EGL Inc., the Dallas-based forwarder formerly known as Eagle USA Airfreight, will merge to form a $1.4-billion global logistics company.
      Circle will become a wholly owned subsidiary of EGL. The merger combines EGL’s very strong domestic U.S. air and ground forwarding network with Circle’s international forwarding experience and customer base. It positions EGL to compete against the world’s largest third-party logistics companies for multinational shipping accounts.
      The all-stock deal, in which Circle shareholders will receive one share of EGL for each Circle share, is valued at $543 million, based on EGL’s closing stock price of $30.75 on June 30. Following the merger, EGL shareholders will own 63 percent of the merged company
and Circle shareholders will own 37 percent.
      EGL and Circle expect to close the deal this fall following regulatory and shareholder approvals. The combined company will have a market capitalization of about $1.5 billion and is targeting a 20-percent annual earnings growth rate. EGL, which will change to a calendar-year fiscal cycle, expects the merger to add immediately to its bottom line and cash flow.
      James R. Crane, chairman, chief executive officer and majority owner of EGL, will continue as head of the new combined EGL. Peter Gibert, Circle’s chairman and CEO, will join EGL’s board of directors.
      “This merger would enhance EGL’s already solid market position domestically and would present tremendous opportunities for international growth,” Crane said in a statement Monday.
      “We have identified a number of compelling opportunities as we seek to maximize shareholder value through this merger,” he said. “Upon closing, we will immediately begin leveraging the economies of scale, benefiting from both the operating synergies and cross-selling opportunities present within our combined base of over 10,000 customers.”
      Circle controls some 300 logistics centers in more than 100 countries with 4,900 employees. The company earned $23.2 million last year on $814.1 million in revenue.
      EGL operates 92 terminals in nine countries with 3,400 employees. Most of its facilities are in North America. The company earned $30.7 million in 1999 on sales of $637.6 million.