Brad Jacobs, founder and original chairman and CEO of United Rentals, has reached an agreement with Express-1 Expedited Solutions, a third-party logistics transportation services provider, where Jacobs and minority co-investors will invest an aggregate of up to $150 million in cash in Express-1. The investment will include up to $135 million from Jacobs Private Equity LLC.
Express-1, a non-asset-based firm, provides expedited transportation solutions, domestic and international freight forwarding and premium truckload brokerage services to retail, commercial, manufacturing and industrial customers.
Once the transaction is finalized and approved by Express-1 stockholders, Jacobs will become majority shareholder in the company and chairman of its board of directors, and will also lead the company as CEO. Jacobs previously built two multi-billion dollar, publicly traded companies: Greenwich, Conn.-based United Rentals, the world’s largest equipment rental company; and United Waste Systems, the fifth-largest solid waste company in the United States at the time of its sale.
“I plan to build a multi-billion transportation brokerage business over the next several years,” Jacobs said. “Express-1 is an ideal platform, with prominent positions in expedited services, freight brokerage and freight forwarding. I’m excited about leading the company into its next phase of growth.”
Current CEO Mike Welch will remain with the company and work closely with Jacobs on growth and acquisition opportunities. “We’re very pleased that Brad has decided to make such a significant commitment to advancing Express-1’s position in the industry,” Welch said. “We view his decision as a strong vote of confidence in the caliber of our employees and our operations.”
In an interview with RER, Jacobs explained that there are literally hundreds of thousands of small trucking companies in North America and that a brokerage service such as Express-1 helps customers find the solutions and services companies need to transfer goods. “It can be a retailer, a manufacturer, an industrial company, any kind of commercial enterprise of any size, that needs to shift something from point A to point B,” Jacobs said.
Jacobs said the freight forwarding segment of the business is another major growth area involving shipping goods or equipment internationally, with “part of the transaction being moving it from one place on the ground to another place on the ground, either a port or an airport” before shipping the items internationally.
Jacobs said the logistics business has great potential for consolidation, much like the waste management and rental businesses did.
Under the terms of the agreement, the investors will receive convertible preferred stock, convertible into about 43 million shares of the company’s common stock at a price of $1.75 per share, and warrants to purchase an additional 43 million shares, approximately, of the company’s common stock.
The transaction, already approved by the company’s board of directors, requires shareholder approval and other customary closing conditions. Express-1 is expected to maintain its current employee level and central operating locations in Buchanan, Mich.; Downers Grove, Ill.; South Bend, Ind.; Rochester Hills, Mich.; Miami and Tampa Bay, Fla. The company’s headquarters is in St. Joseph, Mo.
Express-1, the fifth-largest U.S. expedited freight service provider, serves more than 4,000 retail, commercial, manufacturing and industrial customers. It generated revenues of about $158 million in 2010.
Once the transaction is finalized, Jacobs told RER, he plans to raise additional capital to acquire other third-party logistics brokerage firms and enhance the level and quality of the company’s services.
