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Greyhound, Trailways Merger Tentatively OKd

July 03, 1987|Associated Press

WASHINGTON — The Interstate Commerce Commission gave temporary approval Thursday to the merger of Greyhound and Trailways, the nation's two largest bus companies.

The 5-to-0 vote approving the joint operation of Greyhound Lines and Trailways Lines Inc. came as the Justice Department advised the commission that Trailways qualified as a "failing company" under federal antitrust laws and therefore the merger would not violate those laws.

Justice Department attorneys, economists and financial analysts found Trailways "on the brink of bankruptcy" with "virtually no chance of being restructured as a viable entity," and there are no other purchasers for the firm, the department's antitrust division said in a filing with the ICC.

Under the ICC's temporary approval, GLI Acquisition Co., which controls the Greyhound bus system, will operate Trailways Lines Inc. and plans will go forward for the $80-million acquisition of Trailways, a transaction that Greyhound publicly proposed June 19.

The ICC eventually will decide whether the merger is to be made permanent, and thus the transaction under the commission's order is subject to the possibility of being undone. The two bus lines will begin operating as one next week.

"I think the transaction is really good news for users of low-cost transportation," Fred G. Currey, Greyhound's chief executive said.

Asked about customer pricing under the new structure, Currey said that "we have reduced prices in thousands of (routes between two cities) in the past 90 days where we are sole provider.

"This industry and our company has no pricing power. We price, not against buses, but against automobiles and discount air fares, and business has been based on that policy since the day we bought Greyhound Lines," he said.

Currey and two other Texas businessmen, Craig Lentzsch and Anthony Lannie, purchased Greyhound on March 18 and turned it into a privately held company.

Both Greyhound and privately held Trailways are based in Dallas.

Greyhound had said Monday that it would scuttle its merger plans unless the government acted swiftly to approve the plan.

Greyhound announced plans last month to buy Trailways for $80 million in a deal that would make it the country's only national intercity bus company.

The companies have contended that Trailways, which has been struggling to keep operating, qualifies as a failing firm. Four years ago, Trailways sought to sell stock to the public but was unable to attract investors. It also has failed to attract support of labor unions for an employee stock-ownership plan and last year was unsuccessful in efforts to attract a buyer.

Under the failing firm doctrine of antitrust law, the company to be purchased must show that it will be unable to meet financial obligations with existing assets.

It also must establish that no other firm representing less of a threat to competition is willing to buy the assets.

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