Atlanta, GA, May 16--United Parcel Service said it agreed to acquire Overnite Corp. for about $1.25 billion in cash to expand its ground freight services in North America.
UPS said it would pay $43.25 a share for Overnite, a 42 percent premium over the stock's closing price on Friday on the Nasdaq stock market. Overnite's stock surged almost 44 percent to $42.55 in premarket trading.
The company said the purchase of Richmond, Virginia-based Overnite will give it a variety of "less-than-truckload" and "truckload" freight services for its North American customers.
Under the deal, which is expected to close during the third quarter, UPS will become a top motor freight carrier, an area in which rivals like FedEx Corp. are already strong.
"Overnite is a perfect strategic fit for our company," UPS Chairman and Chief Executive Mike Eskew said in a statement. "We want to offer our customers the broadest portfolio of transportation and logistics services available from a single source and this is an important capability that we needed to have."
UPS, which had a war chest of more than $5 billion in cash as of late last year, expanded its air freight services business five months ago by acquiring Menlo Worldwide Forwarding for $150 million.
Overnite's management team is expected to remain in place, the companies said. Overnite posted net income last year of $63.3 million on sales of $1.65 billion.
