Covenant Logistics recently acquired Huntsville, Arkansas-based Lew Thompson & Son Trucking, a dedicated contract carrier specializing in poultry feed and live haul transportation, for approximately $100 million.
The deal includes an earnout of up to $30 million, depending on the results achieved by the business over the three following calendar years.
“We believe the acquisition is another strong step toward building a more diversified and resilient operating model,” David R. Parker, Covenant chairman and CEO, said in a news release detailing the company’s first-quarter earnings.
Lew Thompson, which serves customers in Northwest Arkansas and surrounding areas, operates approximately 225 trucks. Covenant completed the deal through a 100% outstanding stock purchase, using $45 million in available cash and borrowing $55 million from the company’s ABL credit facility, according to the release. The closing price represented approximately 5.2 times estimated adjusted EBITDA.
The poultry carrier with a diverse trailer fleet, including refrigerated, live-haul, and tank trailers, will be consolidated within Covenant’s dedicated truckload operations, Covenant said. Lew Thompson generated approximately $64 million in revenue last year.
“We are very pleased to welcome the entire Lew Thompson & Son team to the Covenant family,” Parker said. “We pursued Lew Thompson & Son because of their proven track record of operating a first-class dedicated contract carrier business in a niche market, which we believe has less sensitivity to economic cycles and opportunities to grow.
“We believe the backing of Covenant will provide additional resources to expand Lew Thompson & Son to best meet the needs of their strong customer base.”
