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TAMPA -- Quality Distribution Inc. is going private, in an all-cash deal worth nearly three times the company's market capitalization rate.
Apax Partners, a London-based private equity group, will buy the Tampa-based chemical bulk tank trunk network operator at $16 a share, or $800 million. That's 63% above Wednesday's close for Quality at $9.80, where it trades on the Nasdaq under the symbol QLTY. Quality will conduct a 40-day “go-shop” process, according to filings with the U.S. Securities and Exchange Commission, that will look for other offers above what Apax is offering.
While the acquisition was approved by Quality's board of directors, it's still subject to shareholder approval.
The sale would allow Quality to grow without the constraint of reporting to public shareholders, company executives told investors. Quality's fragmented industry offers “compelling acquisition opportunities” that would be more available to the company once it goes private. In 2012, Quality acquired the operating assets of Dunn's Tank Service Inc., as well as Nassau Disposal Inc. in Velma, Okla. for $34.3 million.
The news comes the same day Quality reported a decline in revenue in the first quarter. Quality netted $2.5 million, or 9 cents per share, on revenue of $230.4 million in the quarter ended March 31. That's down from the $3.1 million, or 11 cents per share, profit in the same quarter last year on revenue of $234.5 million.
Profit and revenue did exceed Quality's expectations, however, says Gary Enzor, chairman and CEO. The company's business segments were “impacted by adverse weather conditions in the first quarter,” Enzor says, but were boosted by Quality's chemical and intermodal lines.
Apax has advised funds that total more than $40 billion around the world, according to Quality's corporate filings with the SEC. Previous investments include European speciality chemical distributor Azelis Group and global insurance brokerage Hub International Ltd.
The deal is not expected to affect Quality's more than 800 employees and nearly 400 company-employed drivers, according to filings. However, details of how it might affect the executive level of Quality are still being negotiated.
The transaction is expected to close in the third quarter.
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