Seeking to build “greater lane density to improve utilization and yields through more efficient dispatch and capacity allocation,” Heartland Express Inc. announced it is acquiring Interstate Distributer Co. (IDC) of Tacoma, WA, from Saltchuk Resources. Heartland will pay approximately $113 million, which includes approximately $94 million in cash, $23 million in assumed debt, and $4 million of acquired cash.
“We are excited to add IDC's high-quality drivers, experienced personnel, and strong customer base to Heartland's operations,” said Michael Gerdin, chairman, president & CEO of Heartland. “Our first criterion is always safe and highly qualified professional truck drivers. IDC has an experienced driver base with improving safety results over the past several years, and we are impressed by their culture.”
Heartland said it expects to pay off all of IDC’s debt after the sale closes. It also expects to maintain financial flexibility with a cash balance of over $50 million and remaining debt free.
IDC's fleet consists of approximately 1,350 company tractors, 220 tractors supplied by independent contractors, and 4,700 trailers.
Heartland said it will consolidate overlapping locations over the next 18 months. “Regions with overlap of significant facilities include Seattle-Tacoma, Oregon, Southern California, Phoenix, and Nashville,” it said. “In addition, numerous IDC drop yards will no longer be needed, as Heartland has a footprint of 21 terminal locations across the U.S. that will be utilized along with numerous drop locations.”
Administrative, sales and marketing, pricing, recruiting, safety, accounting, information technology, and similar functions will be combined as well, utilizing personnel from both companies.
“IDC is an excellent operational fit, as its terminal network has nearly direct overlap with our current locations,” Gerdin said. “Heartland will gain significant additional traffic density in the West, and our stronger eastern network will improve service for IDC's customers in the East.”
IDC will be incorporated into and operate under the Heartland brand after closing.
Heartland acquired Washington-based Gordon Trucking in 2013 and since then has invested in updating equipment while repaying the acquisition-related debt.
“With a strong operating base and confidence in the future, we have been carefully evaluating several acquisition candidates and ranked IDC at the top because of the direct path to achieving synergies,” Gerdin said.
Heartland expects to begin updated and modernizing the IDC fleet. It also expects additional savings from improved purchasing power for equipment, including tires, fuel and over-the-road services.
“Since acquiring IDC in 2012, we have made significant investments in IDC's fleet, personnel, and business practices. We are very proud of the advancements in safety and customer service on our watch and we appreciate the efforts of IDC's management to improve the business,” said Mark Tabbutt, chairman of Saltchuk. “Ultimately, we decided to look for a new home for Interstate to allow us to focus investment in other areas of our business. Heartland offered not only a strategic fit for the business that would allow it to grow, but a good cultural match for the team.”
IDC was founded in 1933 and provides primarily dry van truckload transportation services, including local, regional, dedicated, and transcontinental services, with its primary operating territories in the western and southeastern United States. IDC's truckload business generated approximately $325 million in total revenue for 2016, including fuel surcharge revenue.