UPS to Buy Overnite, Adds LTL Shipping Arm

United Parcel Service is buying Richmond, VA-based Overnite Corp for $1.25 billion. The acquisition will enable UPS to expand its ground freight services in North America—specifically its less-than-truckload (LTL) services.

“This certainly puts us on the map in LTL, an arena we have not played in at all previously,” says UPS spokesman Norman Black. ( shipping allows companies whose volume isn’t enough to fill an entire truck to “co-ship” with other companies bound for the same destination, saving them money.) “Since we went public in 1999, we have purchased about 30 companies in an effort to offer our customers as many different logistical options as possible,” Black adds.

Once the deal closes, which will likely be in the third quarter, UPS will rival Overland Park, KS-based Yellow Roadway Corp., a leader in LTL transport. It also enables UPS to heat up its rivalry with FedEx Corp.

“This deal puts us in another area of direct competition with FedEx, but clearly we have other concerns,” says Black. “This is just another piece of the puzzle as we try to offer our customers a variety of services– everything under one roof.” Last year UPS acquired air freight specialist Menlo Worldwide Forwarding for $150 million.

Overnite posted a net income last year of $63.3 million on sales of $1.65 billion. Overnite’s current management team is expected to remain in place once the deal is completed.