Hub Group Inc., a multimodal transportation services provider headquartered in Oak Brook, Ill., has sold off its subsidiary, Mode Transportation LLC, to an affiliate of York Capital Management.
The purchase price is approximately $238.5 million, but is subject to certain post-closing adjustments.
“Cash proceeds will be used for acquisitions of businesses in both new and existing service lines,” Hub Group said. “We are focused on acquiring high-quality businesses that will deepen our relationships with our customers, strengthen our platform for growth and create shareholder value.”
Mode is one of Hub Group’s two distinct business segments and consists of the Mode Transportation LLC business only.
Mode LLC markets and operates its freight transportation services — comprised of intermodal, truck brokerage and logistics — primarily through agents who enter into contractual arrangements with Mode LLC. Mode LLC has independent business owners who sell and operate the business throughout North America, as well as sales-only agents. It has corporate offices in Dallas and Memphis, Tenn., as well as a temperature-protected services division, Temstar, in Oak Brook.
However, the sale does not include the Temstar business, which is being retained by Hub Group.
Hub Group Chairman and CEO David Yeager said the company was looking to sell off its Mode segment during the company’s second-quarter earnings conference call Aug. 1. “Mode has an excellent management team, with a strong solid agent base and loyal customers,” he said. “While Mode has been quite successful in retaining and growing its client base and portfolio of services, there is a lack of strategic alignment with Hub’s centralized business model.”
Hub Group’s other segment, referred to as the Hub segment, has employees throughout the United States, Canada and Mexico and offers various multimodal solutions, including intermodal, truck brokerage, logistics and dedicated services.
Hub Group recorded a net income of $22.1 million on revenues of $1.2 billion for the second quarter, up from a net income of $9.5 million for the second quarter of 2017 on revenues of $923.6 million. The Mode segment’s revenues reached $314.1 million, up 29 percent from last year’s second quarter, while the Hub segment’s revenues totaled $888.2 million, up 26 percent.