Forward Air Corporation (NASDAQ:FWRD) has signed a definitive agreement to acquire all of the stock of Central States Trucking Company and Central States Logistics Inc (collectively referred to as CST) from Central States Inc.
Founded in 1980, CST provides container and intermodal drayage services primarily within the US Midwest. CST also provides linehaul service within the airport-to-airport space, as well as dedicated contract and Container Freight Station (CFS) warehouse services.
CST has a seven-terminal network with approximately 500 office employees and drivers. Bensenville IL-based CST had 2013 unaudited revenues of about $66 million. The purchase price will be $95.6 million, which is roughly eight times 2013 adjusted EBITDA.
Forward Air also anticipates about $15 million in net present value of expected cash tax savings as a result of the transaction. The transaction will be funded by Forward Air’s cash reserves and is expected to be accretive to its 2014 earnings.
Closing of the transaction is subject to customary conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and compliance with the definitive agreement. The transaction is expected to close in first quarter 2014.
Bruce A Campbell, chairman, president, and chief executive officer of Forward Air Corp, said, “For a number of years, we have had the desire to enter the drayage space via purchase of a company with a scalable platform. CST not only provides that platform, but does so while achieving the high margins and low asset intensity that our shareholders have come to expect from us.
“We look forward to the addition of this newest service offering to our airport-to-airport network, TLX full truckload, Complete pick-up and delivery, Solutions final mile, and TQI temperature-controlled services,” he said. “Undoubtedly, there will be both cross-selling and operational opportunities for our combined teams to take advantage of as we move forward.”
Forward Air Corporation operates three business segments: Forward Air Inc, Forward Air Solutions Inc, and Total Quality Inc (TQI). Using temperature-controlled equipment, 24-hour monitoring and tracking technology, and layered security features, TQI provides pharmaceutical services and brokerage transportation services. Headquartered in central Michigan, it serves the United States, Canada, and Mexico.
