Chattanooga, TN-based truckload carrier U.S. Xpress Enterprises purchased a 49% minority stake in Jacksonville, FL-based Arnold Transportation Services for $6.4 million.
The transaction not only is a “good investment in a good company with the potential for a good return,” but opens the door to the possibility of full ownership of the company, U.S. Xpress co-chairman Max Fuller told Fleet Owner.
“There’s a couple of ways to look at this,” he said. “First, we’re investing with a good management team, one we’re comfortable with and one that is well-respected both by its employees and customers. But there are also a lot of synergies between us, so if we want to acquire full ownership down the road, [this investment] gives us that option.”
Arnold’s management team -- led by Mike Walters, president & CEO, and a former executive at U.S. Xpress – bought out the company’s majority stakeholder, Jefferies Capital Partners, with the help of U.S. Xpress and expects to close the buyout by the end of November.
Arnold, a regional dry van truckload carrier serving primarily the eastern U.S., expects to generate approximately $195 million in revenue this year. It operates 900 company-owned tractors, has 520 leased-on owner-operators, and 4,050 trailers.
Fuller added that the deal gives U.S. Xpress access to vitally needed capacity at a low cost, while Arnold gets access to more diverse – and profitable – freight volumes. “We can help Arnold is a lot of ways, especially by giving them more depth with customers and more purchasing power for fuel, tires, and financing,” he said. “We get incremental capacity at a lower cost than if we went out and bought that many trucks ourselves.”
As part of its investment, U.S. Xpress also gets a three-year option to purchase Arnold’s 51% management stake at a specified price based on the current transaction price and a specified annual return. Arnold’s management group also has a similar option to buy out U.S. Xpress’ interest.