Zero Mountain, Cloverleaf deal sparked by Blackstone interest in cold storage industry

by Michael Tilley ([email protected]) 2,325 views 

The announced merger of Fort Smith-based Zero Mountain with Sioux City, Iowa-based Cloverleaf Cold Storage began in September when Zero Mountain Board Chair Mark Rumsey learned that private equity firm Blackstone in January 2018 acquired an interest in Cloverleaf.

“So I called Blackstone,” Rumsey said.

New York City-based Blackstone (NYSE: BX) is a global private equity firm with almost $500 billion in assets under management and holdings in more than 95 companies that employ more than 500,000 around the world. The firm has 2,500 employees in 23 global offices.

Cloverleaf, operating since 1952, is the seventh largest public refrigerated warehouse company in North America. The company employs around 1,200 and operates 19 warehouses in eight midwest and southeast states with more than 102 million cubic feet of capacity.

Zero Mountain, founded in 1951, employs 427 people and operates five facilities in Arkansas. The company manages more than 38 million cubic feet of capacity in Fort Smith, central Arkansas, Northwest Arkansas and Russellville, and is the 11th largest cold storage warehouse business in the United States.

“Long story short, they (Blackstone) sent a team down here,” Rumsey told Talk Business & Politics. “We’ve been in due diligence since the latter part of October.”

The deal was first announced Monday (Jan. 7) and is expected to close in the first quarter of 2019. Terms of the private transaction were not disclosed.

“I am pleased that these two great companies are joining forces,” Bill Feiges, Co-CEO of Cloverleaf, said in the announcement. “The Cloverleaf team has long admired Zero Mountain, which has been built over generations by the Rumsey family upon business values similar to our own. Zero Mountain is highly respected in the cold storage industry, and the Rumsey family is known for its longstanding relationships and dedication to customer service. Its geographic footprint is a strong complement to that of Cloverleaf, and we believe that this combination will create significant value for our customers.”

Rumsey will hold a board seat with the merged company and his son, Joe Rumsey V, now the Zero Mountain president and CEO, will have a senior management position. Mark said both companies are in the process of reviewing personnel, operations and other factors to determine the best path going forward.

“What we’re trying to do is create the ‘best of breed,’ if you will. … They want to look at what we do and see what they like, and we want to look at what they do and see what we like,” Mark Rumsey said, adding that “the critical thing right now is that we take care of all of our people.”

Mark Rumsey is not sure how the company will be branded once the merger is complete, saying it’s a “Blackstone call” when asked if the Zero Mountain moniker will survive.

He also said the deal will immediately benefit both companies thanks to financial and technology resources available through Blackstone. Better data management is part of that, with Rumsey saying both companies have “massive” amounts of information about the industry.

“The data analytics that Blackstone can bring to the table will better monetize what we do with our customers,” he said.

He also said the merged company will look at other acquisitions to “reach a critical mass” within the industry.

Another benefit is that the companies had limited customer overlap, and are in locations that allow for an improved supply chain based on seasonal needs. For example, “we’’ll be better able to pre-position seasonal products,” closer to the markets where they are needed when they are needed.