Third-party transportation and logistics provider MODE Transportation has acquired SunteckTTS for an undisclosed amount, MODE announced in a Nov. 18, 2019, press release. The two multimodal 3PLs will operate under the MODE brand per the merger agreement. The combined entity is expected to generate more than 1.5 million shipments and $2 billion in revenue annually.
"We are very excited to announce this transaction with SunteckTTS. Our two companies are built on a similar culture of outstanding customer service. The addition of SunteckTTS' robust agent, product and customer base further strengthens MODE's broad diversity of service offerings, while continuing to position MODE as a premium provider of technology-driven logistics," said MODE Transportation's CEO Jim Damman.
Once the merger is complete, Damman will serve as CEO of the combined entity while current SunteckTTS CEO Ken Forster will assume the role of president and chief operating officer. The new leadership team will include senior executives from both companies.
"In today's increasingly competitive logistics market, the importance of scale, service diversity and technology cannot be overstated. The combination of MODE and SunteckTTS provides new and existing agents, shippers and carrier partners a significantly enhanced platform positioned for the future," said SunteckTTS's Forster.
The new entity will offer all major transportation modes, including truckload, less-than-truckload, rail intermodal, drayage, air, ocean and parcel freight.
The merger, subject to regulatory approval, is expected to close by year-end.
MODE Transportation, founded in 1989, is headquartered in Dallas. The 3PL operates out of more than 100 offices throughout North America, serving over 3,500 customers and 35,000 carrier relationships. The company is privately held through funds affiliated with global private investment firm York Capital Management.
Hub Group (NASDAQ: HUBG) sold Mode Transportation to an affiliate of York Capital Management for $238.5 million in 2018 in efforts to centralize its operations away from independent owner-operator networks. That sale was completed at a multiple of 10x trailing twelve months adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), likely a multiple similar to that used when Hub Group acquired MODE in 2011.
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SunteckTTS provides multi-modal transportation solutions through a network of sales, operations and capacity associates. The company's agent-based model serves shippers in the U.S. and Canada. SunteckTTS is backed by funds affiliated with global private investment firm Comvest Partners. Comvest plans to retain an interest in the company after the merger.
"This transaction represents an important milestone in MODE's history. A year ago, we launched an initiative to identify strategic acquisition opportunities that would strengthen the MODE platform and enable us to continue to improve the best-in-class service and capabilities we provide to our customers. We look forward to welcoming SunteckTTS as we continue to execute on this strategy going forward," Damman concluded.
Kirkland & Ellis LLP advised MODE. Piper Jaffray and McDermott, Will & Emery advised SunteckTTS.