Roadrunner Transportation Systems Inc. is selling off yet another business unit in its effort to bounce back from an accounting scandal and return to profitability, announcing today that it has agreed to sell its Prime Distribution Services business to C.H. Robinson Worldwide Inc. for $225 million.
The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close by the end of the first quarter.
Plainfield, Indiana-based Prime Distribution Services provides retail consolidation solutions, with five food-grade warehouses in the U.S. Its team of retail supply chain staffers help clients achieve compliance with large U.S. retailer delivery and in-stock requirements. Currently part of Roadrunner's Ascent Global Logistics segment, the unit had revenue of $108.7 million for the year ended December 31, 2019.
Employing approximately 270 people, Prime operates fulfillment and distribution facilities totaling approximately 2.6 million square feet, and serves some 140 customers with distribution, fulfillment, and inventory management services, C.H. Robinson said. Once the deal closes, C.H. Robinson will integrate Prime Distribution Services into its North American Surface Transportation division and its Navisphere multimodal technology platform.
"Prime Distribution Services is a high-quality growth company that brings scale and value-added warehouse capabilities to our retail consolidation platform, adding to our global suite of services," C.H. Robinson CEO Bob Biesterfeld said in a release. "Prime has an outstanding track record of success, a talented and experienced team and a focus on delivering great value to its customers and carriers."
The maneuver is the latest effort by Downers Grove, Illinois-based Roadrunner to slash the company's size. The moves follow management stumbles at the company including being compelled in 2018 to restate its unrealistic 2016 earnings report, then admitting that computer hackers had stolen data from company accounts, also in 2018.
In 2019, the company sold its intermodal business unit to competitor Universal Logistics Holdings Inc. for $51.25 million, soon after unveiling plans to downsize its dry van business line, reducing the company's dry van tractor and trailer fleets by over 50% and laying off some 10% of the company's total workforce.
By selling its Prime Distribution Services line, the company will raise funds to pay down debt and invest in new directions, executives said.
"The divestiture of Prime Distribution Services is a unique opportunity for us to significantly improve our balance sheet by paying off all borrowings under our ABL and Term Loan Credit Facilities. We believe we are well positioned to execute our strategy of simplifying our portfolio by investing in our remaining Ascent Global Logistics, Active On-Demand and asset light LTL segments," Roadrunner CEO Curt Stoelting said in a release. "We also believe that our stronger balance sheet will enable us to pursue additional value-creation opportunities, such as incremental organic business expansion and tuck-in acquisitions. We remain committed to improving operating performance, generating attractive returns on invested capital and building long-term shareholder value."
