March 19 (Bloomberg) -- EGL Inc., a manager of freight services for companies, agreed to be sold today to a group led by founder and Chief Executive Officer James Crane for $1.7 billion, about $500 million more than first offered.

Shareholders will get $38 a share, $2 above Crane's initial bid and 28 percent more than the stock's price before that proposal, Houston-based EGL said in a statement. After the announcement, Apollo Management LP said in a letter addressed to EGL that its ``superior'' offer of $40, though spurned, was still open.

Crane, EGL's largest shareholder, acquired the company with Centerbridge Partners LP and The Woodbridge Co. Ltd., the holding company for Canada's Thomson family, after Deutsche Bank Securities Inc. said the deal was fair. Some investors had said the first offer of $1.2 billion, based on a stock price near a 52-week low, wasn't enough.

``Justice was served,'' said Justin Lumiere, a New York- based analyst at Oscar Gruss & Son Inc. He rates the stock ``buy'' and doesn't own any. ``We're getting closer to a price that fairly compensates investors.''

Shares of EGL, which does business under the name EGL Eagle Global Logistics, rose $2.20, or 6.3 percent, to $37.16 at 4:30 p.m. New York time in Nasdaq Stock Market composite trading. They fell 20 percent in the 12 months before today.

Apollo Letter

Apollo Management, the New York-based buyout firm run by Leon Black, said in the letter addressed to EGL that Crane and his financial supporters alone were granted ``meaningful access'' to company information.

The letter said Apollo offered $38 a share before March 15. It said EGL had set a deadline of March 26 for ``best and final'' bids, then cut short the process without notice. The Apollo letter said EGL hasn't acknowledged its offer.

EGL spokesman Mike Slaughter and Neil Kelley, EGL's lead outside director, didn't return phone calls and e-mails seeking comment. A spokeswoman for Apollo, Anna Cordasco, declined comment.

Apollo in November acquired the warehousing division of the Dutch firm TNT NV, Europe's second-biggest express-delivery service, for 1.5 billion euros ($2 billion). In December, Apollo agreed to buy Realogy, the owner of the Century 21 real estate broker, for about $9 billion, including assumed debt.

EGL's stock could command as much as $50 a share if the company's profit margin were raised to the industry average, Lumiere said in an interview. He expects the shares to reach $40 within 12 months; other analysts put the figure at $36 to $53.

Management Retained

Crane will remain the company's chief executive and own 51 percent of the shares, Steven Price, senior managing director of Centerbridge, said in an interview.

``Jim Crane is a terrific operator who has built a first- class team that provides terrific just-in-time services to an array of global customers,'' Price said.

EGL is the first investment for Centerbridge since former Blackstone LP Managing Director Mark Gallogly raised $3 billion to form the private-equity firm last fall, Price said.

Crane's original equity sponsor, General Atlantic LLC, pulled out on Feb. 7, citing EGL's fourth-quarter results. Profit for the period fell 43 percent to $10.9 million, or 29 cents a share, as customers chose less-expensive ways to ship.

Woodbridge, Merrill Lynch Pierce Fenner & Smith Inc. and Wachovia Corp. will provide debt financing.

Merrill Lynch and Sagent Advisors were financial advisers to Crane's group.

To contact the reporter on this story: David Mildenberg in Atlanta at dmildenberg@bloomberg.net

Last Updated: March 19, 2007 18:08 EDT