Velocity Express Signs Definitive Agreement to Acquire CD&L, Inc.; Merger Will Make Velocity the Market Leader in Time-Critical
05 Juillet 2006 - 1:30PM
Business Wire
Velocity Express Corporation (NASDAQ: VEXP) and CD&L, Inc.
(AMEX:CDV) today announced that they had signed a definitive
agreement for Velocity to acquire CD&L, Inc. in a
fully-financed, two-step, all cash transaction for $3.00 per share.
The acquisition will make Velocity the largest time-critical
logistics company in North America, with more than $450 million in
annual revenues and 5,500 independent contractor drivers, operating
from 150 locations in leading markets across the United States and
Canada. "This transaction makes enormous economic and operating
sense, and will enable us to fully capitalize on the many
capabilities of both companies," said Vincent Wasik, Chairman and
CEO of Velocity Express. "Velocity Express and CD&L operate in
many of the same geographies and serve similar Fortune 500 and
local customers, utilizing a proven independent-contractor business
model. The combination of the two companies will allow Velocity to
leverage its technology and operating infrastructure across
CD&L's diverse and loyal customer base and to identify and
deploy 'best practices' representing the operating strengths of
both companies. The Company will be strongly positioned financially
to satisfy the national logistics needs of corporations looking for
an outsourced service provider in the time critical market, and
also one devoted to the highest levels of customer care." Al Van
Ness, Chairman and CEO of CD&L said, "This transaction
recognizes the value that has been created in CD&L. It is
rewarding to know that the CD&L Management that were
responsible for CD&L's success will be partnering with the key
people at Velocity in order that the combined company will be able
to create the same value proposition for the shareholders of the
combined entity and the enlarged customer base. I am sure, under
the stewardship of Mr. Wasik, that the shareholder valuation and
customer care will be maximized." "Velocity Express has assembled a
strong integration team comprised of members of Velocity Express,
CD&L, and consultants from Alvarez & Marsal to ensure a
smooth transition and rapid value creation to shareholders," said
Mr. Wasik. With the combined company, route density will be
enhanced, providing existing as well as new customers with a
competitive service offering. The Company also believes that it
will be able to gain numerous operating efficiencies as it
eliminates many duplicate costs. As part of the integration,
CD&L Board Director Thomas E. Durkin III has been named Lead
Integration Director of CD&L. During the transition period,
prior to formal shareholder approval, Durkin will coordinate
integration efforts on the CD&L end. Once shareholder approval
is complete, Durkin will be asked to join the combined company's
Board and continue to play an integral role in the integration. A
key element in the acquisition will be the strengthening of
Velocity's excellent managerial team with the addition of the
senior management team from CD&L, as well as a talented sales
and operational team. Bill Brannan (President and COO), Michael
Brooks (Group President), Russ Reardon (CFO), and Mark Carlesimo
(General Counsel), all will be joining Velocity in key executive
positions. Mr. Wasik stated, "Our vision is to double the size of
the company within the next few years as we use our proprietary
track and trace technology and electronic signature capture,
together with our industry-leading service metrics, to satisfy the
time critical demands of customers in industry sectors such as
healthcare, retail, service parts replenishment and financial
institutions." Velocity has acquired in private transactions
CD&L convertible securities that account for 49% of that
company's common shares and executed voting agreements with fewer
than ten selling note holders holding an additional 8% of CD&L
common shares to vote their shares in favor of a merger with
Velocity Express Corporation. Velocity has agreed to certain
restrictions on its ability to exercise its voting rights to enable
CD&L's Board to exercise its fiduciary duties. A meeting of
CD&L shareholders will be held for the purpose of approving the
Merger. A date for the meeting has not been set. There are
approximately 22 million fully diluted shares of CD&L. The
combined entity will operate under the Velocity Express name and be
headquartered in Westport, CT. The transaction is anticipated to
close in mid August. In connection with the signing of the
acquisition agreement, the Company sold 4 million shares of its
Series Q Convertible Preferred Stock for a total consideration of
$40 million and 75,000 units of its 12% Senior Secured Notes due
2010 for a total consideration of $70.7 million. The 12% Senior
Secured Notes consist of a Note with a face value of $1,000 and 345
Warrants to purchase Velocity Express common shares at an exercise
price of $1.45 per share. Each share of the Series Q Convertible
Preferred Stock may be converted into 9.0909 shares of Velocity
Express common stock and carries a 6% dividend which may be paid in
cash or in kind. Simultaneously with this financing, the Company
paid off and terminated its revolving credit facility and Senior
Subordinated Note. Velocity Express Corporation Velocity Express
has one of the largest time definite nationwide delivery networks,
providing a national footprint for customers desiring same day
service throughout the United States. The Company's services are
supported by a customer-focused technology infrastructure,
providing customers with the reliability and information they need
to manage their transportation and logistics systems, including a
proprietary package tracking system that enables customers to view
the status of any package via a flexible web reporting system.
Visit www.velocityexpress.com for more information. About CD&L,
Inc. CD&L, Inc. operates from 98 locations in 25 states,
including operations in 28 customer owned facilities, providing
last mile delivery solutions to various industries. The company has
over 1,500 employees and utilizes approximately 2,900 independent
contractor drivers to provide time-sensitive delivery services to
thousands of customers across the country. For purposes of the
"safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, readers should be aware that this press release
includes certain "forward-looking statements" that involve risks
and uncertainties that could cause actual results to differ
materially. These statements are typically preceded by words such
as "believes," "expects," "anticipates," "intends," "will," "may,"
"should," or similar expressions. Such statements are based upon,
among other things, assumptions made by, and information currently
available to, management, including management's own knowledge and
assessment of the industry in which Velocity and CD&L operate.
Factors that may cause actual results to differ materially from
those expressed or implied by such forward-looking statements
include, but are not limited to, the risk of successful integration
of the two companies, the ability to achieve enhanced route
density, the ability to retain customers, independent contractors
and employees, the ability to achieve operating efficiencies and
eliminate duplicate costs, the ability to double the size of the
company, as well as the risks and uncertainties detailed from time
to time in the Velocity Express and CD&L's filings with the
Securities and Exchange Commission, including their most recently
filed reports on Form 10-Q and 10-K. Velocity Express and CD&L
disclaim any obligations to update any forward-looking statement as
a result of developments occurring after the date of this press
release or to conform them to actual results. NOTE: In connection
with the proposed merger, CD&L intends to file a proxy
statement and other relevant materials with the Securities and
Exchange Commission (the "SEC"). CD&L's stockholders are urged
to read the proxy statement (and all amendments and supplements to
it) and other materials when they become available because they
contain important information. CD&L's stockholders will be able
to obtain free copies of the proxy statement, when it becomes
available, as well as the other relevant materials, without charge,
at the SEC's Web site (http://www.sec.gov). Copies of CD&L's
filings may also be obtained without charge from CD&L at
CD&L's Web site (www.cdl.net) or by directing a request to
CD&L, Inc., Secretary, 80 Wesley Street, South Hackensack, New
Jersey 07606. CD&L and its directors and executive officers and
other members of management and employees are potential
participants in the solicitation of proxies in respect of the
proposed merger. Information regarding CD&L's directors and
executive officers is available in CD&L's 2005 Annual Report on
Form 10-K filed with the SEC on April 4, 2006 and CD&L's proxy
statement for its 2006 annual meeting of stockholders, filed with
the SEC on April 28, 2006. Additional information regarding the
interests of such potential participants will be included in the
proxy statement, and the other relevant documents filed with the
SEC when they become available.
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