The North American bulk chemical transportation specialist and logistics service provider agreed to an all-cash purchase price equivalent to $16 per share.
North American logistics and transportation provider Quality Distribution, Inc. has agreed to be acquired by funds advised by global private equity firm Apax Partners for $800 million in cash, including the assumption of any outstanding debt. The purchase price is equal to $16.00 per share and represents a premium of approximately 63 percent over the company’s closing share price on May 6, 2015.
Subject to customary closing conditions, including obtaining approval from shareholders and the relevant regulatory authorities, the transaction is expected to be completed in the third quarter of 2015. Apax has secured committed financing for the acquisition from Deutsche Bank AG New York Branch, Bank of America, N.A., Jefferies Finance LLC, MIHI LLC and SunTrust Bank.
Under the terms of the agreement, Quality Distribution will have 40 days to solicit alternative proposals once the agreement is officially signed. According to a recent investor note from Stifel, however, the investment bank does not expect another buyer to emerge during the 40-day “go-shop” period, as it considers Apax’s offer to be “very attractive.”
Tampa, Fla.-based Quality Distribution operates the largest chemical bulk logistics network in North America and provides intermodal tank container and depot services through its wholly-owned subsidiaries, Quality Carriers, Inc. and Boasso American Corporation. The company’s subsidiary QC Energy Resources, Inc. also provides logistics and transportation services to the unconventional oil and gas industry.
According to its most recent financial statements, Quality reported $2.5 million in net income for the first quarter of 2015, a 19.4 percent decrease compared to the first quarter of 2014. The company increased total revenues 2.8 percent year-over-year to $207.3 million, excluding fuel surcharges.
“This improvement was primarily due to the 2014 expansion efforts in Chemical Logistics, which drove increased volumes, along with strong growth in the Intermodal business, specifically depot services; these benefits were partially offset by adverse weather conditions and Energy Logistics’ exit from certain underperforming shale regions,” Quality said in a statement.
The company’s Chemical Logistics and Intermodal business units increased their respective revenues 5.7 percent to $7.5 million and 9.7 percent to $3.1 million, excluding fuel surcharges, while revenues in Quality’s Energy Logistics unit were down 13.3 percent in Q1 2015.
Apax Partners, which has more than 30 years of private equity investing experience, controls funds worth more than $40 billion, providing long-term financing to companies in the Consumer, Healthcare, Services, and Tech & Telco sectors.
“We believe our sale to Apax maximizes value for our shareholders and provides Quality Distribution with the increased financial flexibility we need to continue to grow,” Gary Enzor, chairman and CEO of Quality Distribution, said of the acquisition. “Apax supports our strategy and is committed to helping us continue our pursuit of strategic growth in our Chemical and Intermodal businesses while managing the current market conditions in the energy industry. They will bring financial resources and expertise that will assist us as we expand Quality Distribution through internal investment and initiatives as well as disciplined acquisitions. This, in turn, should provide more opportunities for our employees and independent affiliates and benefit our customers through greater scale and cost-effective capabilities.”
“Having followed Quality for several years, we have been impressed with the strategy and vision articulated by the Company’s management team,” added Apax Services team partner Ashish Karandikar. “As the leading logistics platform in the bulk chemical transportation industry, Quality is well positioned to take advantage of both organic growth opportunities and strategic acquisitions while benefiting from the financial and operational flexibility of operating as a private company.”
Stifel echoed those sentiments, saying, “We believe the deal offers compelling value for current shareholders and will provide QLTY with resources necessary to continue its growth in the Chemical and Intermodal businesses, as well as strategic guidance in the Energy segment.”
Apax Partners acquires Quality Distribution for $800m
