TORONTO — As expected, Canada Cartage Diversified Income Fund, which controls Canada’s 11th largest for-hire trucking carrier, has been bought by Providence, RI private equity firm Nautic Partners VI, LP, for $140 million.

The units of the Fund will be redeemed for $11.30 in cash. That value represents a 26.7 percent premium to the April 30, 2007 closing price. Other partners that control 33 percent of the Fund will also sell a “significant portion of their interests” in CCD to Nautic at the same $11.30 per unit price.

The Fund still has the option of terminating the agreement if another party came forth with a better offer.

Canada Cartage is an LTL and full truckload carrier that operates nearly 4,000 pieces of equipment, including over 1,800 power units, and 2,000 trailers. It specializes primarily in customer-domiciled dedicated fleets.

“Since its inception, Canada Cartage has delivered great value to its investors and customers. The offer will result in approximately a 25 percent total
return (including distributions) to unitholders who purchased their units at the IPO at a price of $10,” says Jeff Lindsay, CEO of Canada Cartage.

Adds Brad Wightman, managing director of Nautic: “As a well established business with a long operating history, a reputation for customer service excellence, a strong management team and dedicated employees, this is an excellent opportunity for us.”

The deal bucks the traditional view that trucking trusts in particular don’t make a good fit for private equity firms.

“If private equity involvement extends over into the trucking space for whatever reason, this would likely result in an unexpected lift in trucking trust valuations,” Walter Spracklin of RBC Capital Markets told TodaysTrucking.com yesterday. (Follow the Related Stories link below for the whole story).

While he was surprised to hear that a private equity was the interested party in the Canada Cartage negotiations, Spracklin did say the deal might spur similar transactions if proved successful. He said fleets in niche markets with “sticky,” long-term customer contracts would be the targets for private equities.

Founded in 1986, Nautic Partners is a middle-market private equity firm with over US$1.8 billion of equity capital under management. Its areas of investment focus include business services, manufacturing, health care and communications.

The deal is subject to the approval of the Fund’s unitholders, as well as standard regulatory approvals and due diligence.