Greenbriar to Acquire Dynamex for $210 Million
This story appears in the Oct. 11 print edition of Transport Topics.
Dynamex Inc., a package delivery and logistics operator, has agreed to be acquired by private equity firm Greenbriar Equity Group Ltd. for a total of about $210 million, the companies announced on Oct. 1.
The board of directors at Dynamex, Dallas, approved the purchase for $21.25 a share, a premium of 39% above the price when trading closed on Sept. 30.
Shareholders of Dynamex, which has about 9.8 million shares outstanding, the Federal Trade Commission and the Justice Department must approve the plan.
“A partnership with Greenbriar will provide continuity for Dynamex employees and customers as well as access to capital and other strategic resources,” said Dynamex CEO James Welch, a freight industry veteran who previously held top industry posts at YRC Worldwide Inc. and its predecessors.
“We have known James Welch and admired the company for some time,” said Jill Raker, who is the managing director of Greenbriar.
The move to take Dynamex private was in contrast to recent announcements by three privately held companies — Swift Transportation Holdings, New Century Transportation Inc. and Panther Expedited Services Inc. — that intend to sell stock to the public.
For Greenbriar, Rye, N.Y., which has $1.5 billion of assets under management, the Dynamex transaction is the latest in a series of recent moves.
Among Greenbriar’s current transport holdings is Western Peterbilt, a network of truck dealers. Earlier this year, the private equity firm sold its Electro-Motive Diesel freight rail locomotive business in La Grange, Ill., to Caterpillar Inc.’s Progress Rail unit for $820 million. Greenbriar also sold its stake in American Tire Distributors, Huntersville, N.C., in 2010.
Dynamex said in a statement the transaction could close either in the fourth quarter this year or the first quarter of 2011.
Funding for the transaction will come from committed equity by Greenbriar Equity Fund II and senior secured debt financing from PNC Bank.
Over the past three fiscal years, Dynamex has generated nearly 40% of its revenue in Canada. Its services in the United States and Canada include same-day package delivery, as well as scheduled cargo services and fleet management. Scheduled services accounted for about two-thirds of revenue for the past three fiscal years.
The acquisition announcement prompted at least nine law firms to announce what they said were investigations on behalf of shareholders.
In general, the firms alleged that Dynamex’s board should have investigated more options to sell the company, such as locating other buyers, or negotiated a higher price.
The shares of Dynamex on Nasdaq never topped $20 until the Greenbriar offer took the shares as high as $21. As recently as June 29, the stock was trading at $12.15 a share, and its value fell about 6% in the 12 months prior to Sept. 30.
Dynamex announced the acquisition two months after it finished its 2010 fiscal year on July 31, when it earned $10.7 million, or $1.09 a share, 23% better than the prior fiscal year. Revenue rose just 1% to $406.0 million in the most recent fiscal year.
Although the latest results were an improvement over 2009 fiscal year results, the most recent profit lagged well behind the $15.8 million, or $1.55 a share, for the 2008 fiscal year.
For its 2011 fiscal year, Dynamex is predicting profit of $1.20 to $1.40 per share and a 3% to 9% revenue increase.
The company ranks No. 61 on the Transport Topics 100 list of the largest U.S. and Canadian for-hire carriers.
