Iowa-based Heartland Express buys west coast trucking company

Heartland Express has purchased Gordon Trucking of Pacific, Wash., for $300 million, creating the fifth-largest asset-based truckload fleet in North America.

With the acquisition of 100 percent of Gordon Trucking stock, the combined companies will have total revenue of about $1 billion and a terminal network spanning from Washington to Florida and from Pennsylvania to southern California.

The Gordon family founded the company in 1946. Steve and Scott Gordon have joined Heartland's management team. Larry and Virginia Gordon will retire after 50 years and Larry Gordon has joined Heartland's board of directors.

Heartland Express said the transaction is expected to be immediately accretive to Heartland's earnings per share, excluding transaction-related expenses. The $300 million consists of cash, Heartland stock, and assumed Gordon Trucking  debt, before taking into account about $60 million of expected future cash tax savings attributable to a tax election.

Heartland expects to use approximately $165 million of its cash reserves and have approximately $95 million in outstanding debt after the transaction and repayment of assumed Gordon Trucking debt. The Gordon family has agreed to retain a substantial portion of its Heartland stock through 2017 to align the family's interests with the interests of Heartland's other stockholders.

Michael Gerdin, chairman, president and CEO of Heartland Express, said Gordon Trucking will be a good fit for the Coralville-based trucking company.

"We searched for many years for the best fit to expand our capabilities for customers, our opportunities for drivers, and our growth for our stockholders," Gerdin said. "With Gordon Trucking, Heartland acquires a major presence in the West, affording the combined customer base significant capacity nationwide through what is expected to be one of the five largest asset-based truckload fleets in North America."

Gordon Trucking's West Coast-centered operations and terminal network will significantly increase Heartland's size, geographic coverage and customer diversification. The company has major customers including Georgia Pacific, General Mills, Pepsi, Wal-Mart, and Unilever.

Gordon Trucking generated about $433 million of total revenue and $20 million in operating income, during the 12 months that ended on Sept. 30, 2013. For the same period, Heartland estimates that Gordon Trucking generated about $22 million of adjusted operating income and $60 million of adjusted earnings before interest, taxes, depreciation and amortization.

Heartland Express expects to recognize about $1 million of transaction-related expenses in the fourth quarter of 2013.