Flatbed truckload provider Daseke said Monday that it will buy out founder and former chairman Don Daseke. An agreement to repurchase $107.6 million in stock from Daseke and his affiliates is expected to close “later this week.”
The carrier will use $40 million in cash on hand and issue more than 67,000 shares of preferred stock to execute the transaction. Daseke’s holdings represent 28.6% of the company’s total outstanding common shares. Daseke will resign from the board and he and his affiliates will not be able to purchase shares of the company’s stock for five years.
A recently announced plan by the company to repurchase $40 million in shares has been paused. Nearly $4.9 million of stock had been bought back under that program over the past month.
“Shortly after announcing our $40 million repurchase program, Mr. Daseke informed us of his desire to sell his holdings in the Company for estate planning purposes, retire from the Board and focus his efforts on his philanthropic interests,” CEO Jonathan Shepko stated in a news release. “This provided us with a unique opportunity to repurchase a substantial portion of our outstanding shares on very friendly terms.”
The deal is being conducted at essentially no premium. The company will pay $6 per share for the nearly 18 million shares held by the former chairman.
Shares of Daseke (NASDAQ: DSKE) closed at $5.97 on Friday. The volume-weighted average price for the last 30 days was $5.95 at the time. The stock peaked at more than $12 per share in early March, just as the dry van spot market was rolling over.
The transaction also allows the carrier to avoid buying stock on the open market.
“Shifting capital earmarked for an open-market share buy-back to support this repurchase has put us in a great position to lock in what we believe to be an extremely attractive repurchase price in a single transaction, without straining our tradeable float,” Shepko continued. “For the foreseeable future, our priority will now be continuing our trend of deleveraging our business.”
Net debt increases by $40 million to $490 million, 2.1x trailing adjusted earnings before interest, taxes, depreciation and amortization, compared to 1.9x at the close of the third quarter.
The preferred shares will be split into two tranches. The first tranche of $20 million will pay a 13% cash dividend with the second tranche of $47.6 million carrying a cash dividend of 7%.
“We believe this transaction clearly demonstrates our confidence in the Company’s operating model and strong belief the Company will continue to successfully execute in its transformation strategy, each of which are poised to generate significant future value for our shareholders,” Chairman Chuck Serianni said.
Daseke is a rollup of flatbed carriers, completing more than 20 acquisitions in total since the founding by namesake Don Daseke in 2009. Starting with a fleet of 60 tractors generating $30 million in revenue, the company has grown to more than 4,800 units producing over $1.5 billion in revenue annually.
Daseke stepped away from daily operations of the company in 2019 amid a restructuring and efficiency improvement plan that continues to yield results today.
“Mr. Daseke built the foundation of something truly special in Daseke, and we are thankful for his vision and his many years of service. We wish him well as he enters the next stage of his life, focused on extending his legacy through his charitable giving,” Serianni concluded.
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