Fayetteville firm CaseStack to be acquired by Hub Group for $255 million
Fayetteville-based logistics provider CaseStack, founded by CEO Dan Sanker in 1999 (in Santa Monica, Calif.,) is being acquired by the Hub Group (NASDAQ: HUBG), a large, publicly traded transportation logistics provider based in Oak Brook, Ill. The all-cash deal announced Monday (Nov. 5) is estimated at $255 million and does not include CaseStack’s technology arm SupplyPike, which was recently spun off as a stand-alone company.
Sanker and his management team have been in talks with Hub Group and suitors for the past six months looking for opportunities to continue the company’s aggressive growth trajectory.
Sanker said CaseStack’s management team will remain in place. The company will become a subsidiary and run as usual. He said CaseStack will also be able to provide its customer base with additional services, assets and technology provided by Hub.
“We believe Hub is the perfect fit for us. Our core values, including collaboration, determination and excellence, are aligned,” Sanker said. “The CaseStack team will continue to provide retailer consolidation programs to consumer packaged goods customers and technology-enabled brokerage services.
“We are thrilled that Hub will sponsor our growth by introducing new customers and enhancing our services with assets, drivers and technology. There couldn’t be a better team to help our customers with their challenges. This combination will provide terrific opportunities for our customers, service providers and team members.”
Last year CaseStack grew revenues to $242 million, with net earnings of approximately $22 million, and the company has about 280 employees, most of them based in Fayetteville since Sanker relocated to Northwest Arkansas in 2007. CaseStack still has a large sales office in Santa Monica, Calif., a smaller office in Cincinnati and warehouses throughout the country.
Hub has annual revenues of $3.5 billion and employs more than 4,000 people. The company provides multi-modal transportation services throughout North America including intermodal, truck brokerage, dedicated and logistics services. Hub said the deal will mean a 25-cent charge to earnings this year, but the company expects the deal to be accretive to earnings in 2019.
“This acquisition further advances our vision to diversify and enhance our service offering to our customers,” said Dave Yeager, Hub Group’s Chairman and CEO. “We are very impressed with the business that the CaseStack management team has built. We believe there will be significant opportunities to enhance network optimization with our customers. Similar to Hub, CaseStack brings an established high service, performance-driven culture.”
For Hub, CaseStack will expand the group’s integrated services for supply chain and the expertise it has serving consumer packaged goods (CPG) companies selling to the country’s largest retailers.
For CaseStack, the financial backing of a large public company will ensure there are opportunities to continue growing and innovating. CaseStack was founded by Sanker and boot-strapped early-on, but rapid growth meant bringing in outside investors such as Blumberg Capital, Clarity Partners and Garage Technology Ventures. Since the recession in 2008, CaseStack has grown at a 20% annual clip.
Sanker told Talk Business & Politics there are still tremendous opportunities to remove waste from the supply chain. Between 2008 and 2013, he said CaseStack’s model had saved its customers 40% in logistical costs and had improved time efficiency by 20%. Now with more stringent on-time, in-full (OTIF) demands from retailers like Walmart and Kroger, CaseStack has continued to help suppliers remain in compliance amid higher freight-shipping costs ricocheting throughout the supply chain.
He said CaseStack’s interactions with customers and trading partners have provided significant learnings for the company about the needs of supply-chains across industries. He said the spin-off SupplyPike division will allow that technology arm to keep innovating within the supply chain.
Meanwhile, CaseStack under Hub Group will continue to be a collaborative leader working with CPG companies to run a more efficient supply chain with the least waste and lower environmental impact. CaseStack’s freight brokerage division will continue to grow to focus largely on the less-than-truckload segment for Hub Group.
Hub Group shares were trading at $47.22, up 1.95%, as of mid-morning Monday. Over the past year, the company has traded in the range of $56.60 as a high and $38.40 as a low.