A new special purpose acquisition company (SPAC) that has identified transportation and logistics as a target area for acquisitions also comes with another reason it might target a specific company: location.
In the recent S-1 filing for the MDH Acquisition Corp., the company says it is looking for acquisition targets in what it calls “the heartland.” The $230 million SPAC will search for an “initial” acquisition target in an area it described as bounded by the Rockies in the west, the East Coast to the east, the Rust Belt to the north and the Gulf of Mexico to the south. Three of those boundaries are quite clear but where the Rust Belt begins and ends might be a subject of some disagreement. But a definition like that is clear enough that one can assume California won’t be on the list.
The executive chairman of MDH is Franklin McClarty. Among the leading officers and executives with MDH, he has the clearest ties to the trucking and logistics sector as an outside director for truckload carrier P.A.M. Transportation.
Other founders of MDH are Vice Chairman Jim Wilkinson, CEO Beau Blair and CFO Brent Whittington.
McLarty is the son of Thomas “Mack” McLarty, who is listed as an outside adviser to the company. Mack McLarty is from Arkansas and had longtime ties to Bill Clinton, serving as the former president’s first chief of staff. He had been CEO of Arkla, a natural gas company, prior to that.
Franklin McLarty is described as part of the “McLarty ecosystem of businesses and relationships.” That grouping is focused on the auto industry. But also among the areas in that ecosystem, the S-1 says, is transportation and logistics. That will be one of the acquisition target areas of the SPAC.
The focus on what MDH calls the “heartland” is rooted in that McLarty and the other executives know the region well. But the MDH filing also says that its executives “believe many markets located in the heartland are underserved by the capital markets, possess strong economic growth and as a result create better potential acquisition opportunities.”
“We will pay special attention to companies in underserved markets with sustainable, resilient and growing economic opportunity,” the S-1 says.
MDH hasn’t picked out an acquisition target yet, the company says. It has not “initiated any substantive discussions, directly or indirectly, with any business combination target,” according to the S-1.
In recent years, the S-1 filing says, “we believe … there has been a great migration to the heartland from all across the United States and believe the … pandemic has only accelerated this trend.”
The “differentiator” that MDH has, the management says, is its “proven experience and ability to source transactions in the heartland.”
Despite the focus on transportation and logistics, the S-1 list of companies that its directors and officers have been affiliated with does not include any traditional trucking or logistics companies beyond McLarty’s role as an outside director at PAM. There are several mentions of automotive-related and financial companies — and even a former executive with the Dallas Cowboys. But freight and logistics companies are scarce.
The industries that would be targeted for acquisition beyond transportation and logistics, according to the S-1 filing, wil be telecommunications and financial and professional services. MDH will look to “capitalize on the ability of our management team to identify and acquire a business,” the S-1 says. Its target will be to acquire a “single business” with an aggregate value of $600 million or more.
Like virtually all SPACs, MDH will be offering shares in its IPO at $10 per share with the target of raising $230 million. The company expects to be traded on the New York Stock Exchange.
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