Transportation deals: Fenway Partners acquires East Coast Warehouse & Distribution Corp.

Jeff Berman, Senior Editor -- Logistics Management, 12/5/2007

NEW YORK and ATLANTA—Private equity firm Fenway Partners, in conjunction with Refrigerated Holdings Inc, its platform for temperature-controlled logistics sector investments, said this week it has acquired a majority interest in East Coast Warehouse & Distribution Corp., a third-party provider of temperature-controlled warehousing and logistics services.

Based in Elizabeth, N.J., East Coast has more than 300 customers that are in various industries, including confectionary, cheese, grocery products, alcoholic and non-alcoholic beverages and pharmaceuticals. Services provided by East Coast include temperature-controlled public warehousing, transportation, co-packing, U.S. Customs & Border Protection examination services, container logistics, temperature-controlled national pool consolidation, and contract warehousing, according to a Fenway statement. And it has roughly 275 employees and five facilities in New Jersey with 1.7 million square feet of space. The Fenway statement added that East Coast is the largest provider of temperature-controlled logistics into the Port of New York and New Jersey.

Financial terms of the deal, which was completed in August, were not disclosed. Fenway Partners Managing Director and Co-Head of the Transportation/Logistics Marc Kramer practice told Logistics Management that Fenway and the Lebovitz family, the principal owners of East Coast, agreed to take some time communicating with its respective employees and customers prior to going public with news of the acquisition to ensure a smooth transition.

Fenway also said that East Coast will become part of its Refrigerated Holdings group along with Gemini Traffic Sales, Fenway’s temperature-controlled less-than-truckload (LTL) and truckload (TL) carrier which it acquired in February. East Coast will provide a broader suite of services to Refrigerated Holdings’ customers and is an important step in Fenway’s strategy to create a national, port proximate integrated temperature-controlled transportation and logistics solutions provider, according to the Fenway statement. Fenway also said that Robert J. Adams, former president of Gemini Traffic Sales, has been named president and CEO of Refrigerated Holdings.

This acquisition marks the 26th one Fenway has made in the transportation and logistics space, counting those which are under a letter of intent, said Kramer. Last week, Fenway announced it signed a definitive agreement to acquire FastFrate Inc., a Canadian concern that provides point-to-point LTL and TL haulage within the U.S. and Canada, warehousing, and national drayage and cartage services, among others.

“In evaluating the deal, the Fenway deal team viewed this transaction as an opportunity to add scale to further strengthen the Refrigerated Holdings platform and to invest in a business with a unique position in a critical North American port,” said Kramer. “East Coast embodies a number of the key criteria Fenway looks for in an asset-light investment, including, attractive margins driven by value added services, asset light operations and strong free cash flow generation, and an opportunity for Fenway to add value by leveraging our industry expertise and experience.”

In terms of how this deal may affect East Coast’s service offerings for shippers, Kramer said East Coast will maintain its exceptionally high service standards.  And he added that the partnership with Fenway will add greater transportation resources, as well as accelerate East Coast’s adoption of technology and industry best practices in the areas where it is not already world-class.

“East Coast will have access to greater transportation resources which it can use to add efficiency to its customer’s supply chains,” said Kramer. “Additionally, Fenway and East Coast will work together to adopt technologies and processes that will maximize productivity for East Coast and its customers.”