Universal Logistics Holdings Inc (NASDAQ: ULH) said on Friday the acquisition of Riverside, Calif.-based drayage companies Deco Logistics, Inc. and Oaktree Logistics Inc., which combined are known as Container Connection, in a $60 million all-cash deal that expands Universal’s presence in California to the state’s “Inland Empire” distribution mecca and the breadbasket of the Central Valley.
News of the purchase comes about a week after Warren, Mich.-based Universal closed on a $350 million credit line, proceeds from which will be earmarked for acquisitions. In mid-August, Universal acquired Southern Counties Express, which provides drayage and warehousing services at the ports of Los Angeles and Long Beach, the nation’s busiest seaport complex.
Like Southern Counties, Container Connection has about 25 years of experience working drayage in and around the San Pedro port complex. It works with more than 230 independent contractors that serve the inland areas. It also provides warehousing and yard space at an 18.5-acre facility.
The acquisition price was just above 1X revenue based on Container Connection’s 2017 operating revenues of $55 million. Container Connection will operate as a subsidiary of Universal Intermodal, Inc. and the transaction is expected to be immediately accretive, Universal said.
Universal CEO Jeff Rogers said in a statement that the acquisition complements its local drayage service at the ports and ties together the vast Inland Empire for a “comprehensive southern California intermodal strategy.” Located about 65 miles east of the San Pedro ports, the Inland Empire is the distribution point for Asian imports that clear Los Angeles or Long Beach and are headed east. About 91 million square feet of industrial space was added from 2012 to 2017, and 23 million square feet was under construction as of the start of 2018, according to data from real estate firm Transwestern.
The company declined comment beyond the public announcement. Benjamin Gordon, who runs logistics M&A firm BG Strategic Advisors and is familiar with Universal’s strategy, said the company will remain in acquisition mode.
Container Connection is Universal’s fourth acquisition this year, joining Fore Transportation, Inc. in February, Southern Counties in August, and Specialized Rail Service, Inc., a drayage operator with facilities in Utah and Nevada, in mid-October.