Canada-based Vitran has sold its supply chain operation division to New Hampshire-based logistics services provider Legacy Supply Chain for $97 million.
The deal is expected to close by March 1.
With the sale, Vitran is now focusing on its U.S. less-than-truckload operation.
"We will continue the recovery and growth of our existing business and believe we have positioned Vitran to be a formidable LTL transportation provider in North America. Our LTL team is energized to aggressively develop the company into the future," Vitran’s president and chief executive officer, Rick Gaetz, said in a statement.
With the acquisition, Legacy's North American distribution footprint will expand to 35 facilities, four transportation offices, and more than 6 million square feet of warehousing space in North America and gives the company a presence in the 3PL market servicing large retailers.
"We are always looking for ways to expand our service capabilities, and the Vitran SCO acquisition provided us a perfect opportunity to expand our client offerings," said Ron Cain, Legacy's CEO.
With the sale’s proceeds, Vitran will repay revolver borrowings of $43 million in addition to other assorted debts, leaving the company with around $1 million in net debt, according to a guidance release by Stifel Nicolaus.
Vitran will release its results for the fourth quarter of 2012 on Feb. 20. During the third quarter of last year, the company generated $206.2 million in revenue, showing no growth from the same period in 2011. The company’s net loss of $10.1 million in 2012 outpaced 2011’s third-quarter result of $3.4 million.
At the time, Gaetz blamed Vitran’s poor performance on disappointing results in the U.S. LTL division, which he pointed out was undergoing “positive and constructive changes.”
In the third quarter, the supply chain operation’s revenue grew by $200,000, year over year. - Jon Ross
and Eric Johnson