Canadian health care logistics provider Andlauer Healthcare Group (AHG) has agreed to acquire most of a small pharmaceutical trucking company, Skelton Truck Lines, for nearly CA$115 million ($91 million) in a deal that reflects the high premiums associated with the rollout of COVID-19 vaccines in Canada and the United States.
AHG (TSX: AND) is buying 100% of the 100-truck Skelton Canada and a 49% stake in the 70-truck Skelton USA from the family-owned Skelton Companies, with an option to buy the remainder. Ontario-based Skelton Truck Lines provides transportation within the health-care sector, including vaccines.
“You couldn’t have picked a better time for this,” said Peter Stefanovich, managing partner of Left Lane Associates, a Toronto transportation and logistics mergers and acquisitions advisory firm, which wasn’t involved in the transaction.
Andlauer, which announced the deal on Tuesday, will pay an 8.5-times multiple on Skelton’s earnings before interest, depreciation and amortization. It reflects the strength of the underlying business during the pandemic and an additional premium on the demand for vaccines, Stefanovich said.
Canada’s vaccine rollout has lagged behind the United States amid delays from Pfizer and Moderna facilities in Europe. But federal officials say 3.5 million doses are coming in March alone, which is all but certain to fuel demand for refrigerated tractor-trailers to distribute them.
Skelton the latest deal asCanadian trucking M&A frenzy continues
The Skelton purchase marks the latest major acquisition in the Canadian trucking industry amid a wave of deals in 2021 — TFI International’s (NYSE: TFII) $800 million acquisition of UPS Freight being the largest. Other deals have included Bison Transport, Titanium Transportation Group, Seaboard Transportation Group and XTL.
The abundance of cash and financing available has given the companies doing well during the pandemic the means to buy carriers looking for an exit.
Skelton, however, found itself especially well-positioned. Carriers specializing in vaccine transportation represent a small corner of the industry, especially in Canada.
AHG said the deal will expand its offering refrigerated transportation in Canada in the range of around 35 to 46 degrees Fahrenheit range. Its minority stake in the U.S. will allow the company “to strategically enter the U.S. market by partnering with an existing, well-established operator,” AHG CEO Michael Andlauer said in a statement.
Skelton Companies will join AHG’s supply chain platform as part of the transaction.
“The Skelton name has always stood for care and commitment to its customers, care and commitment to its employees, and care and commitment to the millions of people that, through its customers, rely on Skelton to ensure the safe and secure delivery of blood products, vaccines and biologics each and every day,” Ron Skelton, North American president of Skelton Companies, said in a statement.
AHG executives will discuss the acquisition during a call with financial analysts Wednesday.
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