Ryder System Inc.
), the world's largest provider of integrated logistics and
transportation solutions acquired Euroway Group Ltd., a U.K based
commercial truck leasing, maintenance and fleet management
Though the deal terms remain undisclosed, the acquisition is
reported to add meaningful synergies to Ryder's existing business
in maintenance and fleet management services. The acquisition is
expected to generate annual revenues of £12.8 million
(approximately $20.2 million) for the company. It would add 1,400
vehicles including trailers, 560 full service lease and over 800
contract maintenance vehicles. Further, Ryder would also gain 53
employees of Euroway and three leased facilities in the U.K.
Ryder is also likely to benefit from Euroway's strong base of
contractual high end customers that would strengthen the company's
foot hold in key markets. On the other hand, customers of Euroway
would now be able to access Ryder's vast network of operation and
diversified service offerings.
Acquisitions play a key role in Ryder's businesses structure,
with the company having benefited greatly by most of its business
takeovers to date. Ryder has significantly expanded and tapped new
business opportunities by acquiring several companies.
In early 2011, Ryder System's acquired Carmenita Leasing, Inc.
and Scully Companies Inc., through which it gained access over a
large fleet of vehicles and contractual customers. Further, in June
2011, the company acquired Hill Hire PLC, a leading British company
for commercial truck leasing, rental and maintenance with a strong
foothold in contractual businesses in the U.K. The deal is expected
to foster Ryder's business expansion in heavy duty vehicle contract
(full service lease) and rental markets in the U.K.
We believe Ryder continues to benefit from strong commercial
rental and used vehicle sales backed by favorable lease rate
environments. In addition, strategic acquisitions and increased
investments on vehicles provide potential long-term growth for the
However, we remain concerned about the challenging economic
environment surrounding its operations despite its strong
performance. Further, heavy capital expenditures, a distressed cash
position, lower demand on tighter truckload market and competition
from the likes of
AmeraMex International, Inc.
) are also expected to create significant headwinds for the
We, currently, have a long-term Underperfrom rating on Ryder
System. For the short term (1-3 months), the stock retains a Zacks
#4 Rank (Sell).
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