Forward Air to acquire Towne for some $125 million

Maria

Diet Coke
Staff member
GREENEVILLE, Tenn. —Forward Air Inc. has executed a definitive agreement to acquire CLP Towne Inc. (Towne).

Founded in 1963, Towne is a full-service trucking provider offering time-sensitive less-than-truckload shipping, full truckload service, an extensive cartage network, container freight stations and dedicated trucking. Towne’s airport-to-airport network provides scheduled deliveries to 61 service points. A fleet of approximately 525 independent contractor tractors provides the line-haul between those service points.

Headquartered in South Bend, Indiana, Towne had 2014 unaudited revenue of approximately $230 million. The purchase price will be $125 million, subject to an adjustment for working capital. Forward Air also anticipates approximately $15 million of cash tax savings resulting from the benefit of past net operating losses. The transaction will be funded by our recently replaced credit facility, which in addition to a $150 million revolving line of credit, now also has a $125 million term loan component. Excluding one-time deal-related costs, the transaction is expected to be accretive to 2015 earnings.

The closing of the transaction is subject to various customary conditions, including compliance with covenants and agreements in the definitive agreement in all material respects. It is anticipated that the transaction will close in the first quarter of 2015.

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Unaudited revenue of $230 mil sold for $125 mil?

Operating losses must be huge!
15 mil, at least Maybe 10. Forward Air expects a 15 mil tax credit related to Towne's losses. I imagine Forward just wants the company for the customers. Stomp out the competition and soon forward will haul all airfreight.

The part about the revolving credit makes me more concerned than the buyout. It looks like a tax evasion scheme.
 

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