Vitran sells off rest of its business to Manitoulin Transport Inc.
December 10, 2013
Toronto-based less-than-truckload (LTL) carrier and transportation services provider Vitran Corporation Inc. announced this week that it has entered into a definitive agreement to be acquired by Manitoulin Transport Inc., a Pembroke, Ontario-based provider of LTL transportation services.
Vitran officials said that Manitoulin will acquire all of the issued and outstanding shares of Vitran for $6 per share, with the total transaction, including the assumption of Vitran’s outstanding net debt of $29 million, valued at roughly $128 million.
“We are extremely excited to join with Manitoulin Transport to leverage the operational strengths of both companies,” said Vitran Interim President and Chief Executive Officer, William Deluce in a statement. “Together Vitran and Manitoulin Transport will become a formidable and diversified supplier for customers requiring a full suite of transportation and supply chain services in Canada and the United States. We are extremely pleased that this transaction will provide our shareholders significant and immediate value for their shares. We thank each and every one of our Vitran employees for their efforts and steadfast commitment to Vitran and wish them nothing but the best in the future.”
This announcement follows the completion of the October sale of Vitran’s United States-based less-than-truckload business, which was initially announced in late September.
The business was acquired by Matthew Moroun, vice chairman of Warren, Mich.-based LTL carrier Central Transport International and an industry veteran associated with various transportation industries, including: LTL, TL, flatbed, 3PL, and warehousing.
Vitran said that under the terms of the agreement Moroun acquired 100 percent of the common stock of the wholly-owned U.S. subsidiary, which owns Vitran’s U.S. LTL business. And the company said it capitalized the U.S. LTL business with the net amount of $3 million (U.S.), after deducting the $2 million (U.S.) purchase price received by Vitran from the purchaser. Vitran added that Moroun funded a cash deficit of approximately $1.4 million (U.S.) in the U.S. LTL business between September 23, 2013 and the time of closing.
In late September, when this deal was first announced but not completed, Deluce said that for the last several years, Vitran has invested substantial time and capital to improve its U.S operating results. And while it maintained these efforts have made Vitran’s U.S. LTL business a better operating company, they did not result in financial results that are acceptable to management or its Board.
Deluce, a Vitran board member, replaced Rick Gaetz, whom resigned as president and CEO and a Director of the company in early April. Deluce has been the CEO and a director of various corporations and that Vitran’s Board said in April that this experience combined with his history as a successful entrepreneur, made him well suited to serve as interim President and Chief Executive Officer.
Last March, Vitran completed the sale of its Supply Chain Operation (SCO) unit to Portsmouth New Hampshire-based third-party logistics (3PL) services provider Legacy Supply Chain Solutions for $97 million. When that deal was made official, Vitran said it intended to use a portion of the net proceeds from the transaction to fully reduce its outstanding debt under its senior revolving credit facility, and will have approximately $50.0 million of remaining cash on the balance sheet. SCO accounted for 14 percent of the company’s revenue, former CEO Gaetz told LM in March.
Following that deal, Stifel Nicolaus analyst David Ross wrote in a research note that “Vitran continues to be a big potential turnaround story,” explaining that following sale of SCO it had “plenty of financial breathing room and capital available…to execute a turnaround.”
In late September Vitran said that it received an unsolicited, non-binding proposal and letter of intent from TransForce Inc., a Montreal-based transportation staffing agency, in which TransForce proposed to acquire all of the issued and outstanding common shares of Vitran not already owned by TransForce for $4.50 per share, with TransForce currently controlling 9.51 percent of the outstanding common shares of Vitran.
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