Swift Transportation, the nation’s largest truckload carrier, expanded its refrigerated freight business by acquiring Central Refrigerated Service.
Swift, a $3.5 billion company, paid $189 million in cash and assumed $36 million in capital lease obligations to acquire the $453 million temperature-controlled carrier.
The acquisition gives Swift “immediate scale” in what the carrier says is an $8 billion refrigerated trucking market, a fast-growing sector within trucking.
The deal is also a milestone in Swift’s turnaround after suffering $817 million in losses from 2007 through 2010. Swift had a $114.6 million net profit in 2012.
The Phoenix-based company's profit increased 27.4 percent in the most recent quarter, rising to $42.9 million, and was up 26.5 percent last year.
Prior to the acquisition, refrigerated transportation accounted for about 17 percent of Swift’s revenue, divided almost evenly between dedicated and over-the-road.
Central Refrigerated will give Swift a boost in both operating segments, which the carrier said will help it meet increased customer demand.
Central Refrigerated is the 48th-largest U.S. trucking company, by revenue, according to SJ Consulting Group.
In a listing that will be published in the 2013 JOC Guide to Trucking, SJ Consulting ranked Central Refrigerated as the fifth-largest temperature-controlled carrier.
The West Valley City, Utah-based company, which operates 2,065 tractors, had $504 million in revenue over the 12-month period ending in June, according to Swift.
Central’s profit has soared since the end of the recession. The company had a $25.5 million net profit in 2012, more than double its 2011 profit of $12.2 million.
Swift’s leaders didn’t have to go far to meet Central’s principal owner. The company is owned by Jerry Moyes, founder, chairman and CEO of publicly owned Swift.
The refrigerated trucking business was spun off from Central Freight Lines, a Waco, Texas-based less-than-truckload carrier also owned by Moyes, in 2002.
According to SJ Consulting, Central Refrigerated increased revenue 8 percent in 2012, faster than the average for the 50 largest trucking companies.
Because of the relationship between Moyes, Swift and Central, a special committee of directors and independent financial advisers reviewed the acquisition.
The committee was set up in 2011 to review opportunities for Swift in the refrigerated freight market. The committee unanimously approved the deal.