Hub sells Mode Transport unit to focus efforts on core businesses
Asset-light 3PLs operations not aligned with centralized business model, Hub says.
Intermodal marketing company Hub Group, Inc. said late Friday it sold its asset-light third-party logistics (3PL) provider Mode Transportation, LLC, to a unit of New York-based investment management firm York Capital Management for about $238.5 million.
Oak Brook, Ill.-based Hub said several months ago that it would explore strategic alternatives for Mode, whose decentralized operations no longer fit Hub's centralized business model. TemStar, a Mode unit that provides transcontinental intermodal services for temperature-controlled commodities, was not included in the sale and will be retained by Hub.
"Mode has an excellent management team, with a strong, solid agent base and loyal customers. While Mode has been very successful, there was a lack of strategic alignment with Hub's centralized business model," David P. Yeager, Hub's chairman and CEO, said in a statement.
Hub said it will use the proceeds from the sale in part for acquisitions in both new and existing service lines that will complement its core business.
The sale price is equal to approximately 10 times Mode's adjusted earnings before interest, txes, depreciation and amortization for the 12 months ending June 30, Hub said. That multiple is considered full but fair for well-performing asset-light and non-asset-based businesses. Under an asset-light model, a business does not own transportation equipment or have company drivers but effectively controls its fleet utilization.
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