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UPS Offers Big Premium for Overnite

The company plans to buy the carrier for $1.25 billion.
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UPS

(UPS) - Get Report

agreed to buy

Overnite

(OVNT)

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for $43.25 a share, or about $1.25 billion in cash, a deal that will allow the shipper that calls itself "Brown" to expand its services by offering a variety of less-than-truckload and truckload options in North America.

The UPS pact comes five months after the company expanded its air freight services by acquiring Menlo Worldwide Forwarding. UPS expects to close the purchase in the third quarter.

The Overnite board has unanimously approved the agreement and recommended approval by its shareholders.

Based in Richmond, Va., Overnite reported net income of $63.3 million on revenue of $1.65 billion in 2004. The company has operations in the U.S., Canada, Mexico, Puerto Rico, Guam and the U.S. Virgin Islands. The companies plan for Overnite's management to remain in place.

Shares of Overnite were sharply higher in premarket trading, gaining $12.92, or 44%, to $42.50. The stock closed Friday at $29.58.