RRTS acquires R&M Transportation and Sortino Transportation

If there is a blueprint for acquiring companies in the freight transportation and logistics sectors, non asset-based third-party logistics services provider Roadrunner Transportation Systems (RRTS) may have the blueprint.

The Cudahy, Wisconsin-based company recently announced it has acquired substantially all of the operating assets and business of Omaha, Nebraska-based truckload services providers R&M Transportation and all of the outstanding stock of Sortino Transportation for $24.4 million and an earn-out capped at $5 million.

RRTS officials said that R&M and Sortino mainly move refrigerated product through the United States, leveraging a combination of independent contractors and a fleet of company-owned trailers. They added that in 2001 R&M and Sortino cumulatively generated revenues of roughly $64.5 million.

“The acquisition of R&M and Sortino expands our refrigerated capacity in key lanes and broadens our customer base,” said RRTS President and CEO Mark DiBlasi in a statement. “In addition, R&M and Sortino’s Midwest presence enables us to more effectively cross-sell our truckload services because of their superior service and solid, long-term customer relationships. R&M and Sortino’s principal former owners and experienced management team will remain in place and are excited about the growth opportunities we collectively envision.”

In June, RRTS acquired all of the outstanding capital stock of CTW Transport, a Peabody, Mass.-based truckload carrier specializing in refrigerated food products, for $7.5 million.

Sortino and R&M mark the ninth and tenth acquisitions, respectively, RRTS has made going back to August 2010. In April, it acquired D&E Transport, an asset-light flatbed carrier focused on food and agricultural products, and in February it acquired Capital Transportation Logistics, a transportation services management (TMS) services provider. In September 2011, it acquired Prime Logistics Corporation, a non-asset based provider of logistics and freight consolidation. In February 2011 it acquired Morgan Southern, a privately-held provider of intermodal transportation and related services for roughly $20 million, and in May 2011 it acquired Wichita, Kansas-based truckload services provider Bruenger Trucking Company; and in July 2011 it acquired The James Brooks Company, a provider of intermodal transportation and related services for the ports of Los Angeles/Long Beach and Oakland.

Stifel Nicolaus analyst David Ross wrote in a research note that while RRTS has its roots in LTL it may be emulating the Landstar System, as it is focused on growing capacity both organically and via acquisition—but without buying the trucks.

“Landstar has long characterized itself as a “capacity provider” rather than a trucking company, and we believe Roadrunner sees itself the same way,” wrote Ross. “Both of these asset-light companies want to control capacity without owning (most of) the assets, which we believe is the better business model heading into what we believe is a tightening supply/demand dynamic in the U.S. trucking industry than a traditional broker like C.H. Robinson that relies solely on other companies’ spare capacity.”