BREAKING NEWS: NY private equity buys Consolidated Fastfrate

NEW YORK — The majority interest of LTL intermodal carrier Consolidated Fastfrate and its affiliates Canada Drayage Inc. and Koch Transport have been acquired by Fenway Partners, a N.Y private equity firm.

Financial terms of the transaction were not disclosed.

Fastfrate is one of Canada’s largest for-hire transportation and logistics companies and the country’s third largest intermodal carrier. It ranks at number 47 on Today’s Trucking’s Top 100 For-Hire Carrier List.

Fastfrate is a diversified carrier, offering LTL and truckload from any point within Canada and the Northeast and Midwest United States; national drayage and cartage, warehousing, transloading on both the east coast and the west coast; special operational direct ship programs for retailers, and third party logistics.

The carrier also has a unique 40-year relationship with Canadian Pacific Railway, as it’s the only intermodal carrier to have co-located, transload facilities with the railway in almost every CPR intermodal yard in Canada.

As part of the acquisition, Fastfrate’s existing shareholders, including president and CEO Ron Tepper and other senior managers will continue to hold 25 percent stake in the company. Westerkirk Capital, a manager of private capital for a Canadian investor, will also own a minority interest.

“Fastfrate is a highly successful and recognized leader in Canadian transportation and logistics and is an excellent addition to Fenway’s growing portfolio of investments in this sector,” said Marc Kramer, managing Director of Fenway Partners and co-head of the firm’s Transportation-Logistics practice. “We are enthusiastic to have Ron and his team join the Fenway family and look forward to providing the necessary resources to capitalize on the wide range of growth opportunities that we perceive in the Canadian transportation market.”

Kramer adding that Fenway’s capital and “business-building capabilities” will allow Fastfrate to continue to grow organically and through acquisitions.

Ron Tepper echoed that prediction. “It is very clear to me that there are and will continue to be attractive opportunities for us to grow our business quickly through selective strategic acquisitions … this deal will now give us access to Fenway’s capital, human resources and extensive network in transportation and logistics which will help us reach our goals.”

This is the second major takeover of a Canadian trucking company by a U.S. private equity this year. In May, Canada Cartage was bought by Providence, RI private equity firm Nautic Partners VI, LP, for $140 million.

At the time, TodaysTrucking.com, quoting financial industry experts, speculated that the deal could trigger a series of similar acquisitions in Canada.

While historically, trucking hasn’t been a good fit for American private equity firms, Walter Spracklin of RBC Capital Markets suggested earlier this year carriers that are based on their niche market segment, characterized by higher barriers to entry, have an attractive asset base, better pricing discipline, and higher margins will continue to make more sense for private equity consolidation.

The Fastfrate transaction, which is expected to close by year-end, is subject to Canadian regulatory approval under the Investment Canada Act.

Fenway Partners, Inc. is a middle market private equity firm with offices in New York and Los Angeles and approximately $2 billion under management. Fenway invests in profitable businesses with significant upside potential.