J.B. Hunt Transport Services will spend $136 million to purchase Houston-based carrier Special Logistics Dedicated, allowing the Lowell-based carrier to expand its e-commerce delivery platform.
If the deal closes, it would be the first time J.B. Hunt has acquired another company since 1991, said Brad Delco, trucking/transportation analyst for Stephens.
On Friday (July 21), Hunt announced it had agreed to buy Special Logistics Dedicated and its affiliated entities. The purchase includes no assumption of debt, according to a news release.
“SLD’s strong customer base and strategically placed fulfillment centers position us as a top national pool distribution services provider,” John Roberts, president and CEO of J.B. Hunt, said in the statement. “This acquisition will also allow our customers to deploy ‘big and bulky’ inventories into key markets, improving order fulfillment times for final mile deliveries and further enhancing our e-commerce delivery capabilities.”
J.B. Hunt will use “its existing revolving credit facility to finance this transaction and to provide liquidity for future operations,” the release shows. “Preliminary valuations indicate an incremental amortization expense between $7 million and $10 million annually.”
The purchase isn’t expected to “have a significant impact on interest expense.” Also, the deal shouldn’t impact 2017 operating results but is expected to increase earnings in 2018.
Special Logistics Dedicated provides pool distribution, which is the delivery of goods to numerous points in a specific region, throughout North America. It operates 14 terminals and fulfillment centers and has a fleet with more than 850 pieces of equipment, according to a news release. Its services include dedicated transportation at “dedicated and multi-use sites, cross-docking and contract logistics, less-than-truckload product consolidation, commingled pool distribution and a Texas-based intrastate 57-foot dry van highway service.”
Pool distribution allows a company to combine multiple less-than-truckload shipments into one shipment, resulting in a lower shipping rate, Delco said. The service is used in the distribution of e-commerce freight.
Until now, it’s a service J.B. Hunt hasn’t had a lot of exposure in, he said.