Hub Group to Acquire CaseStack for $255M

Hub Group to Acquire CaseStack for $255M
Dan Sanker, founder and CEO of CaseStack Inc. (Beth Hall)

Hub Group Inc. of Oak Brook, Illinois, announced Monday that it will acquire CaseStack Inc., an outsourced logistics provider headquartered in Fayetteville and Santa Monica, California, for $255 million in cash.

Hub Group expects the transaction to close by early December, subject to customary closing conditions and required approvals.

"We are delighted to welcome CaseStack's employees, customers, carriers and service providers into the Hub Group family," Hub Group Chairman and CEO Dave Yeager said in a news release. "This acquisition further advances our vision to diversify and enhance our service offering to our customers. We are very impressed with the business that the CaseStack management team has built.

"We believe there will be significant opportunities to enhance network optimization with our customers. Similar to Hub, CaseStack brings an established high service, performance-driven culture."

CaseStack, included again this year among Arkansas Business' "Best Places to Work" program, has about 280 employees and two lines of business: CaseStack Logistics Services, which provides consolidation services to consumer packaged goods companies that are selling into the North American retail market, and CaseStack Transportation Services, a technology-enabled truck brokerage with a focus on LTL transportation.

CaseStack also has a non-asset based business model. For the 12-month period that ended Sept. 30, it generated revenue of about $242 million.

"The CaseStack team is excited to join Hub Group," CaseStack Founder and CEO Dan Sanker said in the release. "We believe Hub is the perfect fit for us. Our core values, including collaboration, determination and excellence, are aligned. The CaseStack team will continue to provide retailer consolidation programs to consumer packaged goods customers and technology enabled brokerage services."

He also said in an emailed statement, "We spent decades building a very unique proposition that helps our customers and trading partners create win-win solutions. Now, we will have even more resources to make that a bigger reality ... Both companies have spent decades finding ways to incorporate collaboration and environmentally sustainable business practices into supply chains that reduce waste and costs and improve effectiveness and quality.

"We’ve built a unique business model focused on simultaneously removing costs and improving effectiveness of consumer packaged goods-retailer supply chains. With the power of Hub behind us, we expect to help our customers grow even faster.

"Supply chains are a competitive advantage for our clients. That is Hub Group’s focus and, together, our advantage will be stronger than ever. CaseStack and Hub Group are a perfect match to help our clients manage their increasingly complex supply chain."

"Hub Group recognizes the advantages we have specifically in the communities where we’re located, and we plan to continue to invest here," Sanker added.

He also told Arkansas Business late Monday that he expects 15 percent growth in both people and revenue at CaseStack's Fayetteville office next year and growth for the company as a whole as a result of the transaction. He didn't have an estimate for overall growth.

Sanker said the two companies have gotten to know each other over several years, discovering they have a lot in common. Hub Group had approached CaseStack in the past, but this deal came together in about nine months.

CaseStack will keep its name and be operated in much the same way after the merger, except that Sanker will report to Hub Group's CEO instead of the board he reported to before. 

The "more resources" he referred to in his statement are, in part, trucking assets Hub Group brings to the table. It also brings expertise in rail transportation.

Both companies were growing before now; Sanker expects them to grow more as a result of the transaction.

Hub Group estimates that there will be about $11 million of annual intangible amortization related to the transaction, or about 25 cents per share. Hub Group also expects the transaction to be accretive to earnings in 2019.

Winston & Strawn LLP served as legal counsel to Hub Group. Oppenheimer & Co. Inc. and Goodwin Procter LLP acted as financial advisor and legal counsel, respectively, to CaseStack.

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