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UP to Spin Off Overnite, Motor Cargo

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Union Pacific Corp. has decided to spin off its trucking subsidiaries, Overnite Transportation, the nation's fifth-largest stand-alone LTL carrier, and Motor Cargo Industries. The companies will be sold through an initial public offering, Union Pacific announced Aug. 4.

The company filed a registration statement with the Securities and Exchange Commission relating to the proposed public offering. It hopes to sell 100 percent of Overnite Corp., the holding company which operates the two motor carriers.

The spin off will be managed by an underwriting group managed by Credit Suisse First Boston and Morgan Stanley & Co., the company said.

This is the second time UP has tried to spin off Overnite Transportation, which it acquired for $1.2 billion in 1987. It cancelled a $500 million IPO, in 1998, because of poor market conditions. It also has turned down several offers for Overnite, including a $300-million all-cash offer in 2000.

At that time, Overnite was in the midst of a multi-year battle with the International Brotherhood of Teamsters that culminated in an unfair labor practices strike. It also was recovering from losses suffered in the mid-1990s and heading into an economic downturn.

The company is in a much stronger position today. Chairman and CEO Leo Suggs has led a turnaround at the carrier, generating profits despite labor strife and the poor economy.

Overnite was founded in 1935 by trucking legend J. Harwood Cochrane, who left the company after UP bought it and founded regional truckload carrier Highway Express, Richmond, Va.

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