Werner Enterprises acquires 80% of truckload carrier ECM Transport Group
Werner Enterprises, the nation’s seventh-largest truckload carrier with more than $2.4 billion revenue last year, recently announced it is acquiring 80% of rival TL carrier ECM Transport Group to expand its presence in the strategic Mid-Atlantic, Ohio and Northeast regions.
The acquisition of ECM will boost Omaha, Neb.-based Werner’s fleet by more than 6% as well as increasing coverage for regional short-haul freight in these geographic markets.
Privately held ECM achieved 2020 revenues of $108 million, with an operating margin of 19.8%. Werner said the acquisition was expected to be accretive to adjusted earnings per share within the first year. It operates nearly 500 trucks and 2,000 trailers in their network of eight terminals and 18 drop yard facilities.
Besides its 80% equity ownership stake in ECM for $142.4 million, Werner said it had retained an exclusive option to buy the remaining 20% of ECM Transport Group after a period of five years.
ECM Transport Group consists of ECM Transport, with approximately 450 trucks headquartered in Cheswick, Pa., and Motor Carrier Services of Pennsylvania, headquartered in Northwood, Ohio with approximately 50 trucks. They have been providing truckload services for over 30 years.
Werner said that ECM was initially founded as a traditional truckload carrier, but has diversified itself as a transportation solutions provider and technology innovator in recent years. It said ECM was committed to delivering unique, high-value and customized solutions to its customers.
“The addition of ECM’s skilled drivers, non-driver associates and terminal network strengthens our portfolio by adding short-haul expertise in a segment in which consumer demand and supply chain needs are growing,” Derek Leathers, Werner’s chairman, president and CEO said in a statement.
Besides expanding Werner’s footprint in the Mid-Atlantic, Ohio and Northeast regions, Werner said the acquisition was complementary to Werner’s existing terminal footprint.
Werner said the acquisition would also increase its exposure to the 200-to-300- mile length of haul segment, in support of expected continued demand growth in that next- and second-day lane.
Werner emphasized that it also was acquiring more than 500 “highly-skilled, tenured drivers” in a constrained labor market in which hiring qualified drivers has become nearly impossible for many large TL carriers. Werner said ECM had “extremely low driver turnover” and the two companies had “similar” work cultures focused on safety and customer service excellence.
Existing ECM leadership, including founder and President Ed Meier, drivers and non-driver associates will remain in place. Werner said it was retaining the ECM brand to ensure smooth integration and high driver retention and that it would operate as a stand-alone business unit within Werner.
ECM’s financial results will be reported in Werner’s One-Way Truckload unit within Truckload Transportation Services, the company said.
“Both companies believe deeply that our professional drivers are the backbone of our organizations,” Leathers said. “We look forward to welcoming the ECM team and working together to create additional value for our customers and shareholders.”
“We are excited to join the Werner team and look forward to continued growth as we leverage our collective strengths to serve our existing and new customers at even higher levels,” ECM President Meier said in a statement. “We are standing by our existing customers and will continue to provide them with excellent service. Werner shares our passion for delivering value and continually creating personal and professional opportunities for our accomplished team of professional drivers and non-driver associates.”
Werner said it financed the transaction through a combination of cash on hand, existing credit facilities and a new $100 million fixed-rate term loan maturing in May 2024 with BMO Harris Bank N.A., one of Werner’s two lead banks.
The remaining 20% ownership interest in ECM Transport Group will be retained by Meier. Werner’s option to buy the remaining 20% of ECM Transport Group expires after five years.
