It looks like Wall Street was undervaluing Echo Global Logistics.
In a deal announced Friday morning, the private equity firm Jordan Co., which has 3PL experience in an earlier ownership of GlobalTranz, said it was acquiring Echo for $48.25 per share.
That is a roughly 54% premium over the closing stock price of Echo (NASDAQ: ECHO) Thursday of $31.32.
The deal will take Echo off the public equity markets. In its prepared statement, Echo said the transaction will allow it to have “additional resources and greater flexibility to continue to build its technology and data science platform and enhance its value proposition to shippers and carriers.”
The sale has the unanimous support of Echo’s board of directors, the company said.
Jordan describes itself as a “middle-market private equity firm” with $17 billion under management.
On its website where it notes its investment portfolio, Jordan lists four companies under the category of transportation and logistics: Capstone, which provides transportation management services mostly at distribution centers; AIT, a broad-based 3PL and freight forwarder; Odyssey Logistics, also a 3PL; and Transimpact, which is in the management of supply chains involving parcels.
Jordan had owned GlobalTranz, but only for eight months between 2018 and 2019 before flipping it back to Providence Equity Partners. GlobalTranz and WorldWide Express announced their intention to merge in June.
In its latest quarterly earnings report, Echo reported revenue of $934.5 million for the three months ended June 30. It also listed 2,736 employees for the Chicago-based company.
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Is Jordan really paying 56 times ECHO’s 2020 earnings and earnings have been falling for the last 3 years? Is that what pretty standard brokers with 1% net margins are going for these days? Is my math right? No wonder the board all said yes to that. They all just got LaBron rich.