Canadian supply chain management company Andlauer Healthcare Group (AHG) announced it has acquired Boyle Transportation and the remaining 51% of Skelton USA.
Toronto-based AHG AND also announced it is raising capital through a CA$168.7 million (US$134.4 million) bought deal stock offering. The deal includes 2 million shares of new equity as well as the sale of existing shares from a current shareholder. AHG expects to receive CA$96.4 million ($76.8 million) in gross proceeds.
The offering is expected to close on or around Oct. 26.
Boyle Transportation is being acquired for $80 million, $60 million in cash, and $20 million in new AHG stock, which will have a subordinate voting position and a two-year lockup.
AHG acquired 49% of Skelton USA and 100% of Skelton Canada in March for total consideration of CA$114.7 million ($91.4 million). The remaining 51% of Skelton USA is being acquired for CA$50 million ($39.8 million), half being paid in cash and the other half coming from the issuance of AHG stock.
The cash portion of both transactions will be funded from the proceeds of the equity offering.
The deals are expected to be immediately accretive to cash flow and earnings. Combined, Boyle and Skelton USA generated more than CA$21 million ($16.7 million) in adjusted EBITDA (23.7% adjusted EBITDA margin) for the 12-month period ended Aug. 31.
The acquisitions are subject to customary closing conditions and the equity issuance requires approval from the Toronto Stock Exchange. The Boyle acquisition also requires approval from the U.S. Defense Counterintelligence and Security Agency.
Both transactions are expected to close in the fourth quarter.
| Acquisition price | Boyle ($80M), 51% of Skelton USA ($39.8M) |
| Revenue run rate (Boyle & Skelton USA combined) | $70.6M implied |
| Financing | cash (through equity issuance) and stock |
Table: Company reports (U.S. dollars)
Billerica, Massachusetts-based Boyle operates a fleet of 92 trucks (140 drivers) according to the Federal Motor Carrier Safety Administration's database. The company offers specialized transportation to the life sciences and defense sectors.
"Boyle is a leader in the temperature-sensitive life sciences sector and brings complementary security and visibility capabilities to the defense sector," said Michael Andlauer, CEO at AHG. "Our acquisition of the remainder of Skelton USA coupled with Boyle Transportation significantly advances our strategic expansion into the U.S. health care market."
The current executive management teams at Boyle and Skelton USA will remain in place.
"As part of the highly regarded AHG platform, we will be able to offer a broader suite of services to our valuable clients," stated Andrew Boyle and Marc Boyle, Boyle Transportation co-presidents.
Founded in 2017, Skelton USA operates a fleet of 75 trucks and 100 trailers, providing specialized transportation and cold chain services to the pharmaceuticals and life sciences industries.
"We look forward to continuing to provide best-in-class service to our customers in the U.S. and we believe we are better positioned to capitalize on growth opportunities in the U.S. market as a part of the larger AHG platform, which now includes Boyle Transportation," said Ron Skelton, president of the Skelton Companies.
AHG provides 3PL and specialized transportation services to health care manufacturers throughout Canada. AHG handles logistics, distribution, and packaging for its clients and its specialized services include air freight forwarding as well as dedicated and last-mile transportation.
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