Werner (WERN) Acquires 80% Interest in ECM Transport Group

Werner Enterprises WERN has acquired 80% equity ownership stake in ECM Transport Group (“ECM”) for $142.4 million. The company has the option to buy the remaining portion after a period of five years.

ECM comprises of regional truckload carriers — ECM Transport and Motor Carrier Services of Pennsylvania – that operate nearly 500 trucks and 2,000 trailers. ECM generated revenues of $108 million in 2020.

At a time when trucking volumes are improving owing to recovery in freight demand, Werner’s move to expand its network is encouraging. The acquisition widens the company’s footprint in the strategic Mid-Atlantic, Ohio and Northeast regions, while increasing its fleet size by more than 6%.

Werner Enterprises, Inc. Price

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Werner anticipates the transaction to be accretive in the first year while also expecting cost synergies through integrated management of its combined fleet.

The company stated that ECM will operate as a standalone business unit and its results will be reported under Werner’s One-Way Truckload unit within Truckload Transportation Services. ECM founder and president Ed Meier, along with other leaders as well as drivers and non-driver associates, will continue their associations with the company, Werner said. In order to ensure smooth integration and high driver retention, the company will also retain the ECM brand.

Werner funded the transaction with cash on hand, existing credit facilities and a new $100 million fixed-rate term loan due in May 2024.

Zacks Rank & Key Picks

Werner carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Transportation - Truck industry are USA Truck USAK, ArcBest Corporation ARCB and Landstar System LSTR. While USA Truck sports a Zacks Rank #1 (Strong Buy), ArcBest and Landstar carry a Zacks Rank #2 (Buy) each.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of USA Truck, ArcBest and Landstar have rallied more than 97%, 100% and 42% in a year’s time, respectively.

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