IBJNews

Wabash National shares rise on $360M deal

Back to TopCommentsE-mailPrintBookmark and Share

Shares of Indiana-based Wabash National Corp. jumped Tuesday after the maker of truck trailers said it would diversify its business by purchasing liquid-transportation company Walker Group Holdings LLC for $360 million.

Privately held Walker Group is based in New Lisbon, Wis., and owned by Insight Equity Holdings LLC, a Dallas-based private equity firm.

Wabash, headquartered in Lafayette, said it obtained financing from Morgan Stanley and Wells Fargo for up to $450 million to fund the deal and provide additional money. The deal is subject to regulatory approval and is expected to close during the second quarter.

Shares of Wabash jumped as much as 12.8 percent in afternoon trading before closing up 9.5 percent, to $10.71 each.

That's still down from the stock's 52-week-high of $11.99. Shares were trading above $11.50 last spring, but fell sharply over the summer as broader markets tumbled and fears of a recession grew.

The stock fell as low as $4.22 per share in early October.

Wabash said the deal will help it offer new products to its customers and will immediately start adding to its profits. The company makes the kind of heavy trailers that are used by freight haulers and semi-trucks. Wabash's stock has been hurt in recent years as high fuel prices and weak economic growth have squeezed over-the-road freight haulers.

Walker makes trailers that can carry liquids like dairy products, chemicals or fuel.  The deal will give Wabash a new sources of revenue and a business with fatter profit margins.

Last year, Wabash National posted profit of $15 million on revenue of $1.19 billion. That was better than the year before, when the company reported a net loss of $167.2 million on revenue of $640.4 million.

During its 2011 fiscal year, Walker Group Holdings generated profit of $28.2 million on revenue of $344 million.

Sterne Agee Group Inc. analyst Jeff Kauffman said that the deal could boost Wabash National's profits.

Kauffman said that Walker Group Holdings is a market leader in the liquid tanker business. Walker Group's adjusted profit margin before taxes and other factors was about 15 percent to 16 percent last year, he said in a note to clients Tuesday.

By contrast, Wabash National's profit margin before taxes and other factors is estimated to be 7.2 percent in 2012, Kauffman said.

ADVERTISEMENT

  • Wonderful
    I am extremely excited for this company. I hope they continue to grow and prosper for years to come. I believe they make great products.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
ADVERTISEMENT