Mullen Group Ltd announced the signing of a definitive acquisition agreement to acquire the business, including land and buildings, of the Manitoba-based Gardewine Group Limited Partnership, one of the largest privately owned transportation carriers in Canada, in an all-cash transaction for total consideration of $172.0 million.
Gardewine is comprised of the following businesses: Gardewine North, Northern Cartage, Northern Deck, Northern Bulk, and Northern Logistics. The Transaction is expected to close in early 2015, subject to the satisfaction of all closing conditions customary for this type of transaction, including the receipt of certain third party regulatory and governmental approvals.
Gardewine, a well-established and reputable company founded in 1952, provides both regional less-than-truckload, truckload, and specialized truckload services primarily in Manitoba and Ontario operating a fleet of approximately 660 trucks and 1,300 trailers through a network of 34 owned and leased terminals, employing over 1,500 employees and 140 contract owner operators.
"This is one of those acquisitions that simply does not come along very often,” says Murray K Mullen, chairman and chief executive officer of the Mullen Group. “As I have often articulated we do not acquire companies just for growth. They must be strategic to our business and meet our investment criteria. This Transaction passed both of these tests and of course having the balance sheet and resources available to complete a transaction of this size is an essential component of any acquisition.
"Trucking, and particularly the LTL segment of the transportation industry, has been and will continue to be an important element of the Canadian economy. Acquiring a brand name company like Gardewine will not only provide Mullen Group with a potential new growth opportunity, it will diversify our overall business, adding to our Trucking/Logistics segment during a time when the energy sector in western Canada is facing some cyclical headwinds. Diversification is truly one of the overall strengths of our organization.”
The Mullen Group expects the transaction will contribute additional annual revenue in excess of $225.0 million and will be immediately accretive to Mullen Group shareholders. Currently Gardewine generates margins that are lower than Mullen Group's existing Trucking/Logistics segment. However management believes that once synergies are realized, accompanied by focused capital allocation initiatives, margins will improve and compare more favorably with existing business units in the segment.
The acquisition will expand the geographic coverage of Mullen Group's network of regional LTL business into Manitoba and Ontario. With this acquisition, Mullen Group will own and operate five regional LTL businesses in Canada allowing it to provide enhanced services to all customers.
Based on current forecasts and budgets, Mullen Group's Trucking/Logistics segment is expected to grow from 40% of overall revenue to approximately 50% in 2015.
Gardewine key metrics: Area of Operation: Gardewine delivers to over 500 communities in Manitoba and northern Ontario along with Saskatchewan and Alberta. Gardewine's primary service offering is LTL general freight hauling. In addition, Gardewine provides a wide range of specialized trucking services including dedicated, deck, and bulk hauling.
Operating Assets: 660 power units of which 520 are company owned and 140 are owner-operator units. 1,300 trailers which include straight vans, reefer units, decks, and specialized bulk hauling trailers. Gardewine operates from a terminal network of 23 owned, 11 leased, and nine partner sites. Personnel: 1,500 people of which 750 are drivers and 750 are warehouse, dock, maintenance, operations and administrative personnel.