Wabash National gains synergies, diversification with Walker purchase

March 28, 2012
Wabash National Corporation officials cite product synergy as a critical benefit of the acquisition of cargo tank builder Walker Group Holdings LLC

Wabash National Corporation officials cite product synergy as a critical benefit of the acquisition of cargo tank builder Walker Group Holdings LLC. For instance, Wabash National recently began building frac tanks for oil and gas production, and Walker Group companies already manufacture a portfolio of aluminum and stainless steel tank trailers for the oilfield.

At the same time, the acquisition also brings Wabash National a more diverse range of products and customers, according to Richard Giromini, Wabash National's president and chief executive officer. Speaking during an online conference March 27, he said that there is very little market overlap between Wabash and Walker Group. In addition the acquisition brings a larger international market.

The acquisition was announced March 27. Wabash National officials said the company had entered into a definitive agreement to acquire Walker Group Holdings LLC, a leading manufacturer of liquid-transportation systems and engineered products for $360 million.

The all cash transaction is anticipated to be immediately accretive to the Company's net income and is expected to close in the second quarter of 2012, subject to regulatory approval. Wabash has received committed financing from Morgan Stanley and Wells Fargo of up to $450 million to fund the purchase price and provide additional financial resources.

Commenting on the transaction, Giromini said: "Consistent with our diversification strategy, we are very excited to join forces with Walker, a clear leader in a complementary and growing market. The Company has a leading position in nearly every one of its product categories, well-known brands, strong customer relationships that span over decades, and high margin products supported by industry leading innovation and low cost manufacturing. Walker Group accounts for approximately a third of the market in tank trailers. We are particularly pleased to be adding a deep and talented team under the leadership of Doug Chapple. Our two companies share a strong cultural fit and we look forward to completion of the transaction to then begin to integrate best practices, leverage individual talents, and accelerate strategic growth initiatives across the combined entity."

Doug Chapple, Walker Group’s chief executive officer, said: “We are truly excited about all the possibilities of joining and working together with the Wabash team. This brings tremendous opportunity and growth for our Walker Group employees.”

For fiscal year 2011, Walker Group Holdings generated revenue of $344 million and Adjusted EBITDA of $53 million. EBITDA is a non-GAAP financial measure. Walker Group annual revenue was $344 million. As of December 2011, Walker Group had a $165 million sales backlog, and Wabash National showed a $587 million backlog.

Morgan Stanley is acting as exclusive financial advisor to Wabash while Hogan Lovells US LLP is serving as legal advisor. Harris Williams & Co is acting as exclusive financial advisor to Walker Group Holdings while Hunton & Williams LLP is serving as legal advisor.

Headquartered in Lafayette IN, Wabash National is one of the leading manufacturers of semi-trailers in North America. Established in 1985, the company specializes in the design and production of dry freight vans, refrigerated vans, flatbed trailers, drop deck trailers, truck bodies and intermodal equipment. Its innovative core products are sold under the DuraPlate, ArcticLite, FreightPro, Eagle, and Benson brand names. The Company operates two wholly-owned subsidiaries, Transcraft Corporation and Wabash National Trailer Centers, trailer service centers and retail distributors of new and used trailers and aftermarket parts throughout the United States.

Walker Group is based in New Lisbon WI, and was a portfolio company of Insight Equity Holdings LLC, a Dallas TX-area private equity firm. Walker Group is a leader in designing and manufacturing high-quality, stainless steel products for the dairy, chemical, food and beverage, aviation, personal care, pharmaceutical, sanitary, energy, and nuclear industries. Its innovative products are sold under the Walker Transport, Brenner Tank, Garsite, Progress Tank, Tri State Tank, Bulk Tank International, Walker Defense Group, Walker Barrier Systems, Walker Engineered Products, and Extract Technology Ltd brand names.