Lowell-based carrier J.B. Hunt Transport Services has reached a deal to purchase New Jersey-based carrier Cory 1st Choice Home Delivery for $100 million as the company continues to invest into final mile delivery of bulky items. J.B. Hunt announced Wednesday (Jan. 9) the deal would be paid for using the company’s existing revolving credit facility.
“This is a strategic investment that will further advance our final mile delivery capabilities of ‘big and bulky’ products to consumers and expand our expertise in furniture delivery,” said John Roberts, president and CEO of J.B. Hunt.
Founded in 1934, Cory provides home delivery of big and bulky items across the United States and U.S. territories using 14 warehouses and other customer-owned facilities. Cory has more than 1,000 independent contractors, carriers and delivery drivers, and completes more than 2 million deliveries annually.
“Cory’s exceptional reputation for quality customer service complements our mission to be the best final mile provider in North America,” said Nick Hobbs, executive vice president and president of Dedicated Contract Services at J.B. Hunt. “We are excited to welcome the employees, independent contractors, contract carriers and customers of Cory to J.B. Hunt.”
J.B. Hunt’s Final Mile division is a part of the company’s Dedicated Contract Services segment and operates one of the largest nationwide, commingled cross-dock operations, with the ability to offer service across the United States, according to a news release. In 2017, J.B. Hunt spent $136 million to purchase Houston-based carrier Special Logistics Dedicated, allowing the company to expand its pool distribution and fulfillment delivery services. Pool distribution allows a company to combine multiple less-than-truckload shipments into one shipment, resulting in a lower shipping rate, and the service is used in the distribution of e-commerce freight. The 2017 deal was the first time in 26 years J.B. Hunt had acquired another company.
With the Cory acquisition, the Final Mile division will include 100 locations and more than 3.1 million square feet of warehouse and facilities space. Goldman Sachs & Co. LLC was financial adviser and Mitchell Williams was legal adviser to J.B. Hunt in the deal.
J.B. Hunt declined to say how long the deal has been in the works, but the purchase is expected to be completed by the end of January, on condition that the regulatory filings are accepted. The latter might be impacted by the federal government shutdown.
Brad Delco, analyst for Little Rock-based Stephens Inc., said the purchase supplements the carrier’s build-out of its Final Mile network.
When asked if he was surprised by the purchase, Delco said he was, in that it’s the second acquisition J.B. Hunt has made since 1991, and he thinks another acquisition in 2019 is unpredictable.
“J.B. Hunt is a large, diversified transportation service provider that’s seeing good returns on investments, and they are generating a lot of free cash flow,” Delco said. “If there are no other alternatives for capital deployment for organic growth, then you have to consider inorganic growth, which is making acquisitions. They are making capital allocation decisions that they think are in the best interest of shareholders, and right now they think deploying capital to make this acquisition was what was in the best interests for shareholders.”