Covenant Transport, Inc. announced today its acquisition of 100% of the outstanding stock of Star Transportation, Inc., of Nashville, Tennessee.
Covenant purchased 100% of Star's outstanding stock from the prior owners in exchange for approximately $40 million in cash. Covenant funded the purchase price for the stock from available borrowings under its revolving line of credit. In addition, Star had an estimated $42 million in existing debt that became part of Covenant's consolidated obligations as a result of the transaction. Star's lenders are members of Covenant's bank group and will remain in place following the transaction.
Jim Brower, a 20-year veteran of Star and its current president, along with his staff, will remain in place to run Star.
Star Transportation is a short-to-medium haul dry van regional truckload carrier based in Nashville, Tennessee. Star operates primarily in the southeastern United States, with shipments concentrated from Texas across the Southeast to Virginia, and an average length of haul of approximately 470 miles. Star has an excellent safety record and its annualized driver turnover recently has been about 90%. Star operates a well-maintained fleet of tractors and trailers with an average fleet age of 25 months for tractors and 48 months for trailers.
Star was founded in 1980 and has had a long history of profitable operations and is ISO 9000 certified. Star generated $89.6 million in revenue and $7.1 million in net income for the twelve months ended June 30, 2006, and its total stockholders' equity at that date was $27.5 million.