ArcBest acquires truckload brokerage firm in a $235 million all-cash deal

by Michael Tilley ([email protected]) 2,804 views 

Fort Smith-based ArcBest has signed a deal to acquire Chicago-based MoLo Solutions, a truckload freight brokerage firm, in a cash deal of at least $235 million. The deal will place ArcBest in the top 15 U.S. truckload brokerage market, the company said Wednesday (Sept. 29).

The statement from ArcBest noted that MoLo has access to more than 70,000 “carrier partners” in the truckload shipping business. MoLo posted 2020 revenue of $274 million, and is on track for $600 million in revenue in 2021 – a clear indicator of the ongoing demand for global shipping services.

ArcBest is a shipping and logistics company and its primary subsidiary is ABF Freight, one of the nation’s largest less-than-truckload carriers. ArcBest, which has a market capitalization of $1.986 billion, has almost 14,000 employees and operates at 250 campuses and service centers.

The $235 million all-cash deal, subject to regulator approval but expected to close in the fourth quarter, also includes cash bonuses to MoLo owners based on achieving undisclosed financial targets between 2023 and 2025, according to ArcBest.

“We are pleased to add MoLo’s significant capabilities and talent to our truckload brokerage offering, allowing us to better meet the critical needs of our customers, deliver comprehensive supply chain solutions and accelerate our company’s continued growth,” Judy McReynolds, ArcBest chairman, president and CEO, said in the statement. “Since its founding four years ago, MoLo has built a strong foundation and reputation for excellence based on trusted customer and carrier relationships, as well as a proven ability to offer unsurpassed service. Since we began discussing a possible transaction several months ago, it became clear what a great fit MoLo was with ArcBest.”

The deal taps into ArcBest’s significant cash holdings. When ArcBest posted second quarter financials on Aug. 2, the company reported cash and cash equivalents of $362.619 million. Revenue in the first half of 2021 was $1.778 billion, up 34% compared with the $1.328 billion in the same period of 2020. Net income (unadjusted) in the first half was $84.342 million, considerably more than the $17.782 million in the same period of 2020.

ArcBest’s “strategic” reasons to acquire MoLo included the following.
• Acceleration of asset-Light business (ArcBest logistics) growth by improving ArcBest’s ability to serve larger customers.
• Expanding access to companies with truckload operations,
• Expansion of revenue potential through increased cross-selling potential,
• Larger presence in the logistics hub of Chicago, and
• The deal is expected to boost ArcBest earnings per share within the first year of full combined operations.

“MoLo has been able to reach $600 million in annual revenues with only 500 shippers; in doing this deal, we can now tap into ArcBest’s 30,000 existing shippers and offer them the same level of service we’ve been providing our existing customers,” MoLo CEO Andrew Silver noted in the statement. “In addition to that, we can now offer our customers a breadth of services we couldn’t before, including owned assets, increased drop trailer capabilities, LTL, expedited, outsourced transportation management, and more.”

Silver is expected to remain as MoLo CEO, according to ArcBest President of Asset-Light Logistics and Chief Yield Officer Danny Loe.

ArcBest shares (NASDAQ: ARCB) closed Wednesday (Sept. 29) at $76.78, down 91 cents. During the previous 52 weeks the share price has ranged between $93.96 and $29.02.