Covenant Logistics Group acquired Thompson & Son Trucking and related entities, effective April 26, 2023.
Covenant Chairman and Chief Executive Officer, David R. Parker, commented: “We are pleased to report the completion of the acquisition of Lew Thompson & Son, a dedicated contract carrier specializing in poultry feed and live haul transportation in Northwest Arkansas and surrounding areas. We believe the acquisition is another strong step toward building a more diversified and resilient operating model.”
Under the terms of the agreement, Covenant purchased 100% of the outstanding stock of Lew Thompson & Son in exchange for a closing enterprise value of approximately $100 million plus an earnout of up to $30 million depending on the results achieved by the business over the three following calendar years. The closing price represented approximately 5.2 times estimated adjusted EBITDA of the acquired companies and was funded by cash on hand of approximately $45 million and approximately $55 million of borrowing’s from the company’s credit facility.
Lew Thompson & Son specializes in poultry related feed and live haul freight and will be consolidated within the Covenant’s dedicated truckload results. For 2022, the acquired business generated approximately $64 million in revenue. The transaction includes the option for the company to elect a Code Section 338(h)(10) election subject to a purchase price adjustment. The addition of Lew Thompson & Son is expected to be immediately accretive to earnings per diluted share for Covenant, which trades under the CVLG ticker on the Nasdaq exchange.
Parker said: “We are very pleased to welcome the entire Lew Thompson & Son team to the Covenant family. We pursued Lew Thompson & Son because of their proven track record of operating a first class dedicated contract carrier business in a niche market, which we believe has less sensitivity to economic cycles and opportunities to grow. We believe the backing of Covenant will provide additional resources to expand Lew Thompson & Son to best meet the needs of their strong customer base.”
