United Road Buys Waggoners, Boosting Auto-Haul Capacity

This story appears in the Dec. 23 & 30 print edition of Transport Topics.

United Road Services said it has acquired the auto transport division of Waggoners Trucking, combining two of the five largest car haulers at a time when vehicle sales are continuing to gain strength.

The purchase nearly doubles United Road’s capacity and solidifies its position as the second-largest vehicle hauler. It ranks No. 78 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada.

Waggoners, based in Billings, Mont., has been the fifth-largest auto hauler and ranks No. 94 on the TT Top 100.

Terms of the Dec. 13 transaction were not released.

“Conversations had been ongoing for some time and were not impacted by other deal activity in the marketplace,” United Road CEO Kathleen McCann told Transport Topics on Dec. 18. “The Waggoners reached the point in their business life cycle that they were willing to enter serious dialogue.”

“The companies’ geographic territories are extremely complementary,” added McCann. “Operationally, the Waggoners’ volumes are very dense in the south-central and southeastern U.S. United Road is similarly situated in the Northeast and Midwest.”

United Road’s move was announced as U.S. sales of cars and light trucks surged last month to a 16.31 million annual rate, the highest in more than six years.

The acquisition follows the September purchase by the largest car hauler, Jack Cooper Transport Co., of Allied Systems Holdings for $135 million.

Following the purchase, United Road said it will haul more than 2.5 million vehicles annually, serving more than 10,000 customers, including manufacturers, used-car dealers, auction houses and individuals. The deal gives United Road a total of 75 service locations. The combined fleet now tops 2,500 tractors. Only Jack Cooper is larger, with 4,000 power units.

United Road said its 2014 revenue target is about $550 million. Jack Cooper’s revenue was at $805 million when Allied was included, based on TT100 data. Jack Cooper’s chairman, Mike Riggs, has said he anticipates $1 billion in revenue next year.

Cassens Transport, based in Edwardsville, Ill., is the third-largest vehicle hauler.

“This move makes good business sense,” Robert Farrell, executive director of American Trucking Associations’ Automobile Carriers Conference, told TT.

He said that meshing United Road and Waggoners should improve efficiency for a trucking segment where as many as 42% of haulers’ miles are run empty.

Farrell also said the two acquisitions this year in the carhaul sector were done for different reasons, and were more of a coincidence than a trend.

“There are no parallels between the two,” he said, particularly because the Allied sale arose from a bankruptcy filing that blended two companies whose drivers all were Teamsters.

The Allied acquisition by Jack Cooper is expected to close on Dec. 27, according to the union.

United Road, based in Romulus, Mich., is owned by Charlesbank Capital Partners, which acquired the company last year from The Gores Group, another investment firm.

“Our companies and people have known and worked with each other for years, and there have been conversations around a transaction on and off throughout our history,” McCann said. “When Charlesbank invested in United Road late last year, they also saw the compelling nature of the fit and created new energy around the conversation.”

Waggoners started its auto division in 1987, according to the company’s website. United Road was formed 10 years later in upstate New York and has grown since through acquisitions.

Waggoners was founded 62 years ago to haul eggs in Iowa, according to its website. Company President David Waggoner didn’t respond to calls requesting comment.

The company is retaining its specialized flatbed business that serves the energy exploration business.

McCann also said combination will help to enhance United Road’s operations in the western United States, where both companies run, and that existing technology will boost efficiencies for the combined company.

McCann said United Road’s lenders financed part of the transaction, with additional funding from Charlesbank and management.

From a broader trucking standpoint, the United Road/Waggoners deal caps a busy year in the merger and acquisition market as the sixth major transaction involving TT Top 100 companies this year.

No. 47, Heartland Express, bought No. 61, Gordon Trucking, last month, and No. 31, Knight Transportation, tried to acquire No. 52, USA Truck, earlier this year. USA Truck rebuffed Knight’s $9-per-share offer.

Frozen Food Express, which is No. 66, was acquired in July from Duff Brothers Capital, and Swift Transportation Co., No. 7, bought Central Refrigerated Service.

In addition, Manitoulin Transport, a Canadian carrier, and Michigan trucker Matthew Moroun divided up Vitran Corp., with the Canadian fleet taking the assets in that country.