RRTS acquires Rich Logistics
February 25, 2014
Non asset-based third-party logistics services provider Roadrunner Transportation Systems (RRTS) continues to remain highly active on the acquisition front, announcing yesterday it purchased Little Rock, Arkansas-based Rich Logistics, a provider of truckload and expedited services.
Along with bringing Rich Logistics into the fold, RRTS said it also acquired Everett Transportation Inc., a licensed and bonded freight shipping and trucking company, and certain assets of Keith Everett.
RRTS said the total enterprise value of the transaction was roughly $48 million and was financed with borrowings under its credit facility.
“The acquisition of Rich Logistics provides an excellent opportunity to expand our truckload offering and broadens our access to freight going into and coming out of Mexico,” said Mark DiBlasi, President and CEO of Roadrunner, in a statement. “Rich Logistics’ superior service standards and strong reputation will allow us to strengthen its existing customer relationships as well as cultivate new relationships. Both Rich Logistics’ and Everett’s management teams will stay in place to help achieve the growth opportunities that we collectively envision.”
These are the first acquisitions by RRTS since it purchased the assets of Salisbury, Massachusetts-based refrigerated truckload service provider YES Trans Inc. and all of the outstanding equity of Batesville, Arkansas-based G.W. Palmer Logistics LLC, a non-asset truckload service provider last September.
RRTS President and CEO Mark DiBlasi told LM in a recent interview that the company 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  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 wrote in a research note that this acquisition fits right into the Roadrunner strategy of buying quality small-to-mid-sized transportation/logistics businesses with asset-light characteristics and allowing the existing management team to stay in place and grow the company with the new support of Roadrunner’s balance sheet and broader service offering.
The analyst also noted that Rich Logistics and [its contractor] Everett will provide Roadrunner with a base in the U.S./Mexico cross-border business as well as the automotive industry, explaining that currently, about 50 percent of Rich’s business is cross-border and about 75 percent is automotive, although no customer accounts for more than roughly 20 of total revenue. And about 60 percent of its revenue is from dedicated business, with another 40 percent from expedited business as “driven by the needs of auto companies.”
RRTS said in 2013, Rich Logistics generated revenues of approximately $113 million and also said Rich Logistics is expected to be accretive to Roadrunner’s earnings in 2014.
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