RRTS acquires G.W. Palmer Logistics

Non asset-based third-party logistics services provider Roadrunner Transportation Systems (RRTS) said this week it has acquired all of the outstanding equity of Batesville, Arkansas-based G.W. Palmer Logistics LLC, a non-asset truckload service provider.

RRTS said the purchase price was roughly $2.5 million, plus an earn-out capped at $2.8 million, adding that the acquisition was financed with borrowings under Roadrunner’s credit facility. And it added that for calendar year 2012 G.W. Palmer generated roughly $20 million in revenues, with G.W. Palmer expected to be accretive to Roadrunner’s near term earnings.

“The G.W. Palmer acquisition enhances our truckload service offering in the South due to its concentration in temperature controlled products,” said Mark DiBlasi, President and CEO of Roadrunner, in a statement. “G.W. Palmer’s management team will remain in place and are excited about the growth opportunities we collectively envision. We look forward to supporting and expanding G.W. Palmer’s strong customer relationships and service record as we expand the business.”

RRTS continues to make acquisitions at a fervent rate, with this deal following recently announced acquisitions of Marisol International LLC, a non asset-based supply chain-critical, provider of international logistics services in late July and the Southeast drayage division of Transport Corporation of America (TA Drayage), a provider of intermodal transportation and related services in the Southeast, in August.

DiBlasi recently told LM that RRTS intends to remain active on the acquisition front.

“We have a profile we use for [acquisitions],” he said. “Since January 2006, we have made a total of [26] acquisitions and look for companies that are well-run and well-managed profitable businesses and non-asset or light-asset in their business model. Even though we acquire some companies with assets at times, we do look for companies that provide capacity that are actual carriers and are going to give us additional reach…or compliment existing resources as we build out our portfolio of services and are immediately accretive. Integration is also key as we look for a very strong cultural fit between the management team we are acquiring and our management team. If that fit is not there, we will walk away from a deal; we have done that before.”

Stifel Nicolaus analyst David Ross recently wrote in a research note that this summer Roadrunner announced a public offer of 4.3mm shares of common stock, consisting of 1.5mm primary shares, and 2.8mm of secondary shares from selling stockholders, adding that it will also grant a 645,000 share over-allotment option (15% of the total issue) to come exclusively from current ownership.

And BB&T Capital Markets analyst Thom Albrecht commented in a research note that this move by RRTS is another classic tuck-in acquisition.

“Contrary to the view of some, RRTS is not making acquisitions on a helter-skelter
Basis,” Albrecht wrote. “During the past couple of years nearly all deals have been done to fortify existing niches such as TCS (temperature controlled services, intermodal and TMS. While the recent Marisol deal expanded RRTS into global freight forwarding, other deals strengthen core competencies.”