UPDATE 2-Hub Group buys Exel Transportation for $83 mln

* Deal gives Hub 20 pct share in U.S. intermodal mkt

* Exel Transportation to add to earnings from 2011

* Hub Group shares rise 8 pct, touch year high

(Adds details on deal impact, intermodal offerings)

April 4 (Reuters) – Freight broker Hub Group Inc
bought Dallas, Texas-based smaller rival Exel Transportation
Services for about $83 million in cash, gaining a bigger
foothold in the fast-growing U.S. intermodal market.

The deal will add to Hub Group’s profit from this year, and
will give it a 20 percent share in the U.S. intermodal market —
a mode of transportation where freight is moved across multiple
transportation platforms such as ships, rails and trucks.

KeyBanc Capital Markets analyst Todd Fowler said the deal
was a positive, given its potential to add to earnings and help
in further expanding Hub Group’s product lines.

Fowler also said the purchase price was reasonable.

Exel Transportation — an affiliate of Exel Inc, which is a
wholly-owned subsidiary of Deutsche Post (DPWGn.DE: Quote, Profile, Research) DHL — had
2010 sales of $717 million. Intermodal accounted for about 41
percent of that.

Hub Group had 2010 revenue of $1.83 billion.

On a conference call with analysts, Hub Group executives
said Exel Transportation’s small- and mid-size customer base —
an area where Hub lacks reach — and its temperature protected
service line were attractive.

That service line offers refrigerated intermodal containers
for perishable food and non-food products.

Hub Group had approached Exel Transportation many times in
the past, company executives said on the call, adding that it
finally prevailed in a bidding process.

Freight brokers such as Hub Group and Exel Transportation
fix their customers — usually manufacturers, retailers and the
like — with transportation companies that own trucks, rails or
ships for the movement of their goods.

They also offer intermodal containers — basically those
that can be transferred as a whole along with goods being
transported between trucks and rails, and negotiate rates for
its customers.

In recent times, intermodal has gained share from truckers
in the transportation market because of fuel and cost
efficiencies.

Exel Transportation will add $550-600 million in revenue to
Hub Group’s 2011 revenue. It will add in the high-single to
low-double digits in cents per share to 2012 earnings.

It will operate as a wholly-owned subsidiary of Hub Group
under the name Mode Transportation.

Hub Group shares rose as much as 8 percent to touch a
year-high of $39.08 on Monday on Nasdaq.
(Reporting by A. Ananthalakshmi; Editing by Jarshad
Kakkrakandy)

UPDATE 2-Hub Group buys Exel Transportation for $83 mln