OKOTOKS, Alta. — Mullen Group announced today an agreement to purchase Manitoba-based Gardewine Group, one of the largest privately-owned transportation companies in Canada.
The deal is valued at $172 million, which will be paid in cash. Included are: Gardewine North, Northern Cartage, Northern Deck, Northern Bulk and Northern Logistics.
The deal is expected to close in early 2015, Mullen announced.
Gardewine provides LTL and truckload services as well as specialized truckload services, primarily in Manitoba and Ontario. It operates 660 trucks and 1,300 trailers through a network of 34 terminals with more than 1,500 employees and 140 owner/operators.
“This is one of those acquisitions that simply does not come along very often. 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,” explained Murray Mullen, chairman and CEO of Mullen Group. “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.”
Mullen added: “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.”
Mullen said the acquisition should add more than $225 million in annual revenues, even though Gardewine currently achieves lower margins than Mullen’s trucking firms bring in. The company expects to change this by realizing synergies once the acquisition is completed.
Here’s what Mullen Group liked about Gardewine Group:
It’s a stable, profitable, well-managed business
The acquisition expands Mullen Group’s geographic LTL coverage into Manitoba and Ontario
The deal is expected to add about $25 million in annual operating income with potential to increase
The transaction includes 23 owned terminals valued at about $40 million
The acquisition will diversify Mullen Group’s current revenue stream. Mullen expects its trucking/logistics segment to grow from 40% of its total business today to 50% in 2015
The acquisition will support Mullen’s dividend structure when the oil and natural gas industries in Western Canada experience cyclical downturns
And the acquisition represents a good use of cash already on Mullen’s balance sheet.
Gardewine by the numbers:
Gardewine serves more than 500 communities in Manitoba and northern Ontario, as well as in Saskatchewan and Alberta
Its primary service offering is LTL general freight hauling, but it also provides a wide range of specialty hauling, including dedicated, deck and bulk
Gardewine controls 660 power units, of which 520 are company owned and 140 belong to owner/operators. It also has 1,300 trailers including straight vans, reefers, decks and specialized bulk trailers
Gardewine has 23 owned terminals, and 11 that are leased as well as nine partner sites
Staff include 1,500 people, of which 750 are drivers and 750 are warehouse, dock, maintenance, operations and administrative personnel.
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