Crane finds new takeover partners as EGL quarterly profit dives
Jim Crane, chief executive officer of EGL Inc., has found new partners for his attempt to takeover the Houston-based company, which operates under the name EGL Eagle Global Logistics.
The announcement came at the same time as the company reported a 43 percent drop in fourth quarter net income.
Investment firms Centerbridge Partners L.P. and The Woodbridge Co. Ltd. are replacing private equity firm General Atlantic LLC, which earlier this month withdrew its support for Crane’s buyout due to the anticipated poor quarterly results.
Crane currently owns about 18 percent of the outstanding common stock of EGL, and his $36-per-share in cash offer remains the same as it was before.
Merrill Lynch, Pierce, Fenner & Smith Inc. and Woodbridge intend to provide the $1.175 billion of debt financing necessary to complete the transaction. Merrill Lynch also is serving as financial advisor in connection with the offer.
'I am pleased to have reached a deal with Centerbridge, Woodbridge and other members of senior management to renew my previous offer at the same price per share and to provide an opportunity for all of EGL's shareholders to realize a significant premium,' Crane said.
'Our proposal would keep our valued key senior management team and employee base intact and enable us to seamlessly continue to provide our customers with the high level of service they have come to expect from EGL.'
EGL's fourth quarter net income was $10.9 million, compared to $19.1 million in the same period in 2005. Operating income in the latest quarter dropped 35 percent to $17.9 million while revenue improved 3 percent to $861.3 million.
'Our financial performance in the fourth quarter was disappointing, especially given the strong momentum we had earlier in 2006,' Crane said. 'We generated record revenues in the quarter in spite of industry-wide softness and the decline in revenue per shipment in our domestic freight forwarding operations. We are taking the necessary steps to address the financial performance of our residential delivery business, align our cost structure and continue to focus on delivering superior service to our customers.'
For the whole of 2006, EGL's net income was down 3 percent to $56.3 million. Operating income increased 1.1 percent to $96.5 million with revenue up 4 percent to $3.22 billion.