Officials with Fort Smith-based Arkansas Best Corp. are not commenting on a Reuters report that they are in talks to buy a logistics company that could deliver more than $140 million in annual revenue.
The Reuters report suggests the deal to buy Seville, Ohio-based Panther Expedited Services would be valued at more than $150 million. Panther is owned by New York City-based Fenway Partners.
As a logistics company, Panther does not own trucks or other capital-intensive equipment. Rather, they provide transportation and shipping solutions to more than 11,000 customers worldwide, according to the company’s website. Panther works with more than 5,000 ground and air carriers to provide shipping logistics.
Reuters reports that Panther also “runs on an owner-operator structure in which truckers drive their own trucks for Panther” under a revenue sharing agreement.
“There is nothing we have to say about the story. Our corporate policy is not to comment on rumors,” David Humphrey, Arkansas Best vice president of investor relations and corporate communications, noted in an e-mail reply to The City Wire.
Management at Arkansas Best Corp., the parent company of ABF Freight System, have made no secrets about an interest in acquiring companies that help diversify the revenue stream.
ABF — one of the largest less-than-truckload carriers in the U.S. — was responsible for $1.73 billion of the $1.907 billion in revenue Arkansas Best posted during 2011. Arkansas Best posted 2011 net of $6.159 million, a huge swing from the $32.693 million loss during 2010. The 2011 financials marked the end of two consecutive years of income losses.
The company recently purchased Wichita Falls, Texas-based Albert Companies for $4 million to expand the special services division. At the end of 2011, the special services division recorded $85.6 million in revenue, better than the $63.7 million during 2010. Operating income in the segment during 2011 was $2.7 million, up almost 60% compared to the $1.7 million during 2010.
Despite significant financial losses in the past few years, Arkansas Best still holds enough cash to acquire new operations without loading up on debt. As of March 31, cash and cash equivalents at Arkansas Best totaled $138.5 million, and short-term investments — which could be quickly liquidated — totaled $45.2 million. The two funds provide Arkansas Best with $183.7 million of “unrestricted cash and short-term investments,” down from about $209 million at the end of the first quarter of 2009.
In a January 2009 interview with The City Wire, then CEO Robert Davidson said Arkansas Best was working with an “advisory firm” to review expansion opportunities. Arkansas Best said it would spend $800,000 for the review.
“We are looking at the broad field of transportation distribution and logistics. We are going try to stay in industries with some adjacencies something that where we can add value. But we have widened at this point,” Davidson explained during the interview.
Michael Tilley with our content partner, The City Wire, is the author of this report. He can be reached by email at email@example.com.
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