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HOW TO TAKE OUT YOUR COMPETITOR 101


When Aveda Transportation purchased US firm Hodges Trucking earlier this year, it wasn’t just about expanding the business, it was about removing a difficult competitor.

With the deal closed, Aveda outlined in much detail through a press release why it decided to purchase its competitor even when oil and gas drilling activity has dried up.

The US$42-million deal included about 900 pieces of rig moving and heavy haul equipment, including about 200 haul trucks, 400 trailers, 70 bed/pole trucks, 35 cranes, 40 forklifts and loaders and 160 service vehicles.

Aveda has already sold about 350 pieces of the newly acquired equipment, generating about US$22 million. Some of the remaining assets have been folded into Aveda’s business.

“The remaining equipment will either be sold offshore to permanently remove excess capacity in the North American rig moving industry or, if the equipment cannot be sold on suitable terms, the company will keep the equipment and deploy it as market conditions improve,” Aveda explained.

Aveda has already recovered through asset sales about 52% of its investment in Hodges. It expects to recover all its acquisition-related expenses over the next six months as a result of new business acquired through the deal and decreased pricing pressure that should result.

So, with most of the equipment sold, or planning to be sold off, what was the point of buying Hodges?

“The acquisition of Hodges has allowed the Company to consolidate its largest competitor in the United States,” Aveda went on to explain. “Although Hodges has an excellent safety record, strong customer relationships and talented people, Hodges created considerable pricing pressure for Aveda. The company believes the consolidation of Hodges into Aveda will help the company solidify customer relationships and reduce overall pricing pressure.”

About 85 of Hodges employees will be retained but some facilities were closed and others consolidated.

“This transaction allows us to grow our operational footprint in key markets, expand our blue-chip customer base and better manage pricing pressures as we continue to grow,” said Kevin Roycraft, president and CEO of Aveda. “The successful completion of this acquisition is the result of a lot of hard work by the Aveda team, as we were well positioned to take advantage of this incredible opportunity brought on by current market conditions. We intend to take advantage of additional opportunities as they arise, with the intent of becoming the leading rig mover in North America.”


James Menzies

James Menzies

James Menzies is editor of Truck News magazine. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at james@newcom.ca or follow him on Twitter at @JamesMenzies.
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