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Done deal: ArcBest closes on MoLo; $235 million initial price tag

Deal creates a top-15 truck broker

ArcBest will now have 70,000 carriers on its platform (Photo: Jim Allen/FreightWaves)

ArcBest announced Monday that it closed on the acquisition of Chicago-based truckload brokerage MoLo Solutions. The acquisition price included a $235 million upfront cash payment plus the potential for future earnout payments that could exceed the initial amount.

At $600 million in projected 2021 revenue, the MoLo deal advances ArcBest’s (NASDAQ: ARCB) goal to increase its asset-light operations to a level that is on par with its asset-based trucking unit. The deal will increase ArcBest’s brokerage revenue to $1.2 billion, double the size of its platform to 70,000 carriers and make it a top-15 truck broker in the U.S.

ArcBest plans to consolidate the two brokerage platforms into one, utilizing Mastery Logistics Systems’ cloud-based TMS, which MoLo operates on currently.

Management from ArcBest previously said MoLo was operating breakeven on the operating income and earnings before interest, taxes, depreciation and amortization lines. MoLo is expected to exit the fourth quarter of 2022 generating $25 million in adjusted EBITDA, and management is forecasting that the deal will be accretive to earnings after one full year of ownership.

Several big brokerage deals have been announced in recent weeks.

Hub Group (NASDAQ: HUBG) recently announced plans to acquire refrigerated truck broker Choptank Transport for $130 million. In September, Freight brokerage Echo Global Logistics (NASDAQ: ECHO) said it had entered into an agreement to be taken private by The Jordan Co. in a $1.3 billion deal. Uber Freight (NYSE: UBER) acquired Transplace for $2.25 billion in July .

ArcBest reports third-quarter results Tuesday before the market opens; however it provided a better-than-expected update when it announced the acquisition.

Asset-based revenue, including less-than-truckload operations, increased 20% year-over-year with tonnage up 2% and yield (including fuel surcharges) up 18%. ArcBest reported 200 basis points of sequential margin improvement for the third quarter. Historically, there is no change in the margin from the second to the third quarter.

The LTL unit recorded an 89.6% operating ratio through the first three quarters of 2021.

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.