Werner Enterprises (WERN) announced that it has acquired an 80% equity ownership stake in ECM Transport Group for $142.4 million.
Shares of Werner Enterprises, the largest transportation and logistics company in the U.S., have jumped 15% over the past six months. (See WERN stock chart on TipRanks)
ECM Transport Group is a diversified transportation solutions provider with a fleet of 500 trucks and 2,000 trailers spread across a network of 8 terminals and 18 drop yards throughout the Mid-Atlantic, Ohio, and Northeast regions. It reported revenues of $108 million and an operating margin of 19.8% in 2020.
Per the terms of the deal, Werner has an exclusive option to buy the remaining 20% stake in the company after five years. Until then, the 20% ownership interest will remain with the founder and President of ECM, Ed Meier.
The addition of ECM will increase Werner’s fleet by over 6% and complement the company’s existing terminal footprint as well as enhance its driver footprint in the crucial regions of the Mid-Atlantic, Ohio, and the Northeast.
Furthermore, the deal is expected to be accretive to earnings from the very first year and will lead to cost synergies through the integrated management of the combined fleet.
Werner CEO Derek Leathers commented, “The addition of ECM’s skilled drivers, non-driver associates and terminal network strengthens our portfolio by adding short-haul expertise in a segment in which consumer demand and supply chain needs are growing.”
He further added, “This transaction delivers on our ‘5 Ts + S’ strategy and will position us for further growth as we capitalize on positive market dynamics for the remainder of 2021 and beyond.”
The acquisition has been closed and was funded by available cash on the balance sheet, an existing credit facility, and a fixed-rate term loan of $100 million maturing in May 2024.
Recently, J.P. Morgan analyst Brian Ossenbeck maintained a Sell rating but increased the price target on Werner from $38 to $40 (10.3% downside potential).
Overall, the stock has a Hold consensus rating based on 5 Buys, 2 Holds, and 3 Sells. The average Werner price target of $52.70 implies 18.2% upside potential from current levels.
Related News:
Philip Morris International to Acquire Fertin Pharma for $820M
Amedisys to Acquire Contessa Health to Create a One-stop Home Healthcare Delivery Platform
Bally’s Corporation Deal with Gamesys Gains Shareholder Approval; Shares Rise
