J.B. Hunt Transport Services Inc. and several partners have sold a Frisco, Texas-based freight brokerage business to CI Capital Partners LLC of New York.
George Abernathy, chief operating officer of Transplace, said Wednesday that the Texas-based business founded in 2000 by six trucking companies had been angling for a sale for the past five years.
Transplace’s owners wanted “to be able to provide the business with operating capital to more aggressively pursue acquisitions and other growth opportunities that we’re not capable of doing,” Abernathy said, declining to disclose the amount of the transaction.
Donald Broughton, a St. Louis-based transportation equity analyst with Avondale Partners, said the sale amount was $44.5 million, a combination of $14.5 million in cash and $30 million in assumed debt. Avondale Partners, which is based in Nashville, Tenn., performs financial services for three of Transplace’s original carrier owner-investors.
Transplace employs a total of 500 people in locations in Texas and Arkansas. More than 300 people are employed in Lowell in Northwest Arkansas, while around 100 work for the firm in Stuttgart in southeast Arkansas, the company said.
Lowell-based J.B. Hunt remained one of the four original investor-owners at the time of the sale, which closed Friday, Abernathy said. Other remaining carrier owners included Swift Transportation of Phoenix, and U.S. Xpress Enterprises Inc. and Covenant Transport, both of Chattanooga, Tenn.
CI Capital Partners is a private equity firm whose portfolio includes health-care and manufacturing businesses.
Broughton said each of the original carrier investors in Transplace contributed $5 million and their logistics operations to start the company. He said that Transplace became profitable in the third quarter.
For the original carrier investors the sale “did not represent the best return on investment that they ever made,” he said. “The company was sold because it was not contributing to the carriers’ whole business and some of them found this out almost immediately.”
Most of the carriers that started Transplace have restarted their in-house brokerage and logistics departments, including J.B. Hunt, which did so in 2007.
Transplace said more than half of its business is from servicing “dedicated” customer accounts such as Wal-Mart Stores Inc., Del Monte and U.S. Gypsum. Transplace said it has more than 650 customers and is ranked among the top-10 freight-capacity brokers in the nation. The company generates more than $700 million in annual revenue, according to a news release.
Joost Thesseling, a principal at CI Capital Partners, said in a news release that Transplace is “an excellent growth platform.”
“The market for outsourced transportation is very large and fragmented, and we believe Transplace is well-positioned to continue to expand its [thirdparty logistics] and freight-brokerage businesses organically as well as through strategic acquisitions,” he said.
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Business, Pages 21 on 12/24/2009