Ryder receives unsolicited indication of interest from activist investor HG Vora

Late last week, Miami-based freight transportation and logistics services provider Ryder System Inc. confirmed it received an offer by an activist investor to acquire the company.

Ryder said in a statement that it received an unsolicited indication of interest from New York-based HG Vora for $86.00 per share in cash

“Consistent with its fiduciary duties and in consultation with its financial and legal advisors, the Ryder Board of Directors will carefully review and evaluate the indication of interest to determine the course of action that it believes is in the best interest of the Company and its shareholders,” said Ryder.

Ryder officials declined to provide additional comment to LM outside of the statement.

The Wall Street Journal reported that the total value of the proposed deal would be $4.4 billion, taking Ryder private. It added that HG Vora owns a 9.9% stake in Ryder, with the investment firm saying in a regulatory filing that it is “proposing to buy the rest of Ryder’s outstanding shares.

And Bloomberg reported that this development “comes amid heightened attention on the supply chain, with clogged ports and trucker shortages exacerbating strains across the global network for transporting goods.”

Like many of its competitors, Ryder has taken steps to further expand its service offerings amid the changes and challenges presented by the pandemic.

In June 2021, it announced moves to Ryder Last Mile, its customizable, multi-tiered delivery service offering for big-and-bulky goods, in the form of new United States-based hubs in Milwaukee and Philadelphia.

With the addition of these two new hubs, Ryder said it is part of an effort geared towards positioning its customers, some of whom are the world’s largest brands, in closer proximity to end-customers, “in order to meet ever-growing demands for delivery in two days or less.”

And in January it inked an agreement to acquire Industry City, Calif.-based omnichannel fulfillment and logistics services provider Whiplash. Ryder officials said that the purchase price is roughly $480 million.

Whiplash’s service portfolio is comprised of scalable e-commerce and omnichannel fulfillment offerings for more than 250 start-up, enterprise, and enterprise brand shippers, according to Ryder, adding that the company has 19 dedicated and multi-client warehouses comprised of around 7 million square-feet, with access to key port locations and gateway markets. Perhaps the most significant element of this deal is that Ryder said its e-commerce and omnichannel fulfillment offering is expected to be able to deliver to 100% of the U.S. within two days and 60% of the U.S. within one day.

In November 2021, Ryder completed its acquisition of Midwest Warehouse & Distribution System (Midwest), a provider of warehousing, distribution, and transportation solutions. The company said this deal is expected to add approximately $135 million in annual revenue to Ryder’s supply chain solutions business segment in 2022 and provide incremental growth to Ryder’s earnings in 2022, as well nine multi-client and eight dedicated-customer warehouses primarily serving food, beverage, and consumer packaged goods customers. Midwest’s warehouse is comprised of around seven million square feet and is supported by a company-owned fleet of trucks to service customers, said Ryder.

Ben Gordon, Managing Partner of Cambridge Capital, an investor in niche supply chain leaders, and also Managing Partner of BGSA Holdings, a leading mergers and acquisitions advisory firm focused on the transportation, logistics, and supply chain technology sector, said that he believes more activist investors will follow HG Vora’s lead in targeting publicly-traded logistics businesses.

“Ryder is trading at 3.9x EBITDA. CH Robinson is trading at 11.5x EBITDA. XPO is trading at 5.5x EBITDA. And GXO is trading at 6.3x EBITDA,” he said. “These are all well below their historical averages. I would expect to see more interest in these and other companies.”