The board of directors of Ryder System Inc. has told a large investor that the proposed buyout of the transportation and logistics company undervalues its shares.
Speaking to attendees of Ryder's annual investor day gathering late last week, Chairman and CEO Robert Sanchez said he had recently spoken with Parag Vora, founder of HG Vora Capital Management, about Vora's proposal to pay $86 in cash for each Ryder share that HG Vora doesn't already own. (The day before Vora went public with his offer on May 13, Ryder stock had ended trading at about $71.) Sanchez said he told Vora the board considered his offer but that it didn't measure up to the value of the Miami-based company.
"Our board remains committed to maximining shareholder value and believes that the plan that we have going forward would result in a much higher value for our shareholders," Sanchez said on investor day.
HG Vora had submitted its bid after growing its Ryder holdings to about 5 million shares—about 10% of Ryder—from 3 million since the end of 2021. In his letter, Vora said he and his team "value the management team's acumen and deep experience" and is looking to take Ryder (which ranks No. 3 on FleetOwner 500: For-Hire list) private to help it realize its value.
On investor day, Sanchez said he had not yet heard back from Vora but that given the investor's significant stake in Ryder, he and the board planned to continue to discuss the company's strategy. Vora has not made a public statement since, but Robert W. Baird analyst Garrett Holland last month said he did not expect the Ryder board to show much interest in a sale "unless takeout value rises meaningfully."
Ryder's financial performance of late is helping the company in that regard. In April, executives reported first-quarter profits of nearly $176 million (versus about $50 million in the prior-year period) as revenues climbed 28% to nearly $2.9 billion. Sanchez and his team then raised their guidance for 2022 profits per share and, late last week, lifted that forecast again, this time to a range of $13.23 to $14.23 from a previous range of $12.83 to $13.83. In a statement, Sanchez said better pricing across its business units and strong rental and used-vehicle sales drove this second positive adjustment.
Shares of Ryder (Ticker: R) were changing hands June 8 around $81.25. Year to date, they have essentially flat, leaving the company's market value at about $4 billion.
