Intermodal transportation provider Hub Group said Tuesday it has formed a joint venture with Mexico’s largest intermodal carrier, EASO. The deal is expected to be immediately accretive to Hub Group’s earnings.
Mexico City-based EASO is a 50-year-old family-run company providing intermodal, truckload (including dedicated) and freight brokerage services. It operates a network of terminals serving all domestic markets in Mexico as well as cross-border logistics hubs in the U.S. The company touts a “diverse base of blue-chip customers.”
Financial details of the transaction were not provided, but Hub Group (NASDAQ: HUBG) said EASO is expected to generate $115 million in revenue this year and that accretion expectations don’t include future cross-selling opportunities or cost synergies.
By comparison, Hub Group’s intermodal and transportation segment generated $2.5 billion in revenue last year, with consolidated operations totaling $4.2 billion.
EASO’s current management team will continue to run the operation.
“The joint venture aligns with our long-term investment strategy and further enables our vision to deliver the premier supply chain solution,” said Phil Yeager, Hub Group president, CEO and vice chairman, in a news release. “Our cultural alignment with EASO and the family, increased scale and expanded network in Mexico will lead to enhanced service and value for our customers.”
The deal creates “the largest cross-border and intra-Mexico intermodal company,” the release said, allowing Hub Group to further convert over-the-road truck freight to rail.
Raymond James was Hub Group’s financial adviser on the transaction.