Private equity firm Thayer Capital Partners has put together a merger that would create a large, specialized less-than-truckload carrier, said Dawes Transport, one of the merging companies, in a May 2 statement.
Dawes and Roadrunner Freight Systems, both Wisconsin-based companies, were to become Roadrunner-Dawes, an LTL carrier that would specialize in heavyweight LTL shipments. The new company would operate nationally from a new
Roadrunner-Dawes was expected to generate combined revenue approaching $365 million in 2005, said Alan McBride, chief executive officer of Dawes. "We are projecting a little over 202 million in revenue for Dawes and $163 million from RoadRunner."
Dawes and Roadrunner rank 95th and 100th, respectively, on the Transport Topics 100 list of the largest
Thayer bought Roadrunner from American Capital, another investment firm, April 29. It had purchased Dawes from the company's owners on April 1. The firm was not available for comment by press time.
Given its estimated revenue, Roadrunner-Dawes would have ranked No. 50 on the TT 100, between truckload carrier Celadon Group and petroleum hauler Kenan Advantage Group.
In the LTL sector, the proposed new company would have ranked 16th, between Central Freight Lines and New England Motor Freight.
Unlike the December 2003 Yellow-Roadway merger, which produced a corporation that controls several operating companies, a Dawes spokesman said Roadrunner-Dawes would operate as an integrated company.
"The strategy is just a good fit," said Condy Dixon, vice president of sales and marketing for Dawes.
"Dawes has terminals in the Northwest, Roadrunner has terminals in the Southeast and both companies have operations in the
Washington D.C.,-based Thayer Capital, is a private equity investment firm that manages three investment funds totaling $1.5 billion. It focuses its investment efforts on industrial products and services, including logistics and distribution.
"Private equity companies see an advantage in logistics investment," said Stash Jindel, a Pittsburgh-based trucking industry consultant. "They invest because they know goods must be moved and we will continually have a need for trucks."
Although analysts at Morgan Stanley described LTE stocks as being "at the high end of historical levels" earlier this year (1-17,p.1), Jindel said trucking is still a valuable investment.
"The transportation logistics sector in spite of whatever growth it has had recently, is at the early stage of a whole new growth potential," said Jindel. "As globalization continues to evolve, the logistics and transportation infrastructure will become more critical."
Dawes-Roadrunner would manage a nationwide network of terminals in several large markets said
Roadrunner's Southeast terminals include
McBride said the new company would expand first in the Midwest, focusing on the
The combined company would operate a total of 20 terminals, and haul shipments with an average weight of nearly 1,700 pounds, said
Heavyweight less-than-truckload service is a specific market niche, said Jindel, and may limit the base of customers the new company can serve. "The future is in a broader range of weight and distribution capabilities," said Jindel.
"We plan on being strong in the medium-to-large shipment markets," said McBride.
The company would continue to be and expedited LTL long haul carrier, said
McBride would be CEO of the combined company, while Roadrunner president Barry Turner would serve as chief operating officer.
McBride estimated that the new company would employ close to 1,000 workers in additions to nearly 750 owner-operators.
Meanwhile, both McBride and Turner said the company would grow after the merger. "We're going to increase the national scale of the company," said Turner. "We have the very definite plans to continue to expand our terminal network."