Brazos Private Equity Partners announced its fifth acquisition in less than a year with its purchase of intra-regional express shipping company Lone Star Overnight. The deal was completed Dec. 31.
While terms of the transaction were not disclosed, Brazos Partner Randall Fojtasek said the company’s enterprise value fit within its typical investment range of $25 million to $250 million, and fell below $100 million. The firm will finance the deal with a combination of senior and subordinated debt provided by Madison Capital and Merrill Lynch. Fojtasek added that the debt contribution would represent more than half of the total purchase price. Lone Star tapped J.P. Morgan Chase to manage the sale of the company.
Based in Dallas, Brazos is already a frequent user of Lone Star’s services, according to Fojtasek, and was a loyal customer well before the transaction took place. Lone Star Overnight provides next-day delivery of packages within and between Texas and Oklahoma. The company focuses on underpricing the larger, national players, and advertises that by concentrating on a specific region, it can offer a price structure that allows for savings of more than 50% over the better-known national carriers, including FedEx and UPS. Lone Star, since its founding in 1991, has shown uninterrupted growth of more than 20% annually.
Brazos plans to keep the management team in place, with CEO and Founder Gary Gunter maintaining his spot at the helm. Fojtasek, meanwhile, will assume the role of chairman.
In helping Lone Star grow, Brazos will pursue other strategic acquisitions to help bolster the company geographically. Specifically, Fojtasek cited that Lone Star will look for acquisitions “outside of the company’s existing footprint,” and will also seek out deals that could expand sales and marketing and help it extend into neighboring states. With this strategy in mind, he expects Lone Star to maintain its historical 20%-plus growth levels going forward.
Brazos used its $400 million Brazos Equity Fund, LP for the transaction. The firm, through its inaugural fund, has been active this past year, acquiring five platform companies in the past 10 months. In addition to Lone Star, Brazos has acquired CoMark Building Systems, Rennhack Marketing Services, Shelter Distribution and National Surgical Care.