- Mullen Group (TSX:MTL), a Canadian iteration of Warren Buffett’s Berkshire Hathaway, has signed a letter of intent to acquire ContainerWorld Forwarding Services using existing credit lines
- ContainerWorld will remain founder-led and is expected to generate annualized revenue of about C$150 million, with operating income before depreciation and amortization margins in line with Mullen’s Logistics & Warehousing segment
- Mullen Group is one of Canada’s largest logistics providers
- Mullen Group stock (TSX:MTL) is flat year-over-year, and has gained 9.44 per cent since 2019
Mullen Group (TSX:MTL), a Canadian iteration of Warren Buffett’s Berkshire Hathaway, has signed a letter of intent to acquire ContainerWorld Forwarding Services using existing credit lines.
The Richmond, British Columbia-based acquiree is a logistics company providing integrated supply chain solutions to global alcoholic beverage and hospitality clients in B.C. and Ontario, including inventory management, freight forwarding, warehousing and distribution services.
The company would operate within Mullen’s Logistics & Warehousing segment (L&W), with ContainerWorld founder Dennis Chrismas intending to stay in his current role at the company and oversee the transition. ContainerWorld is expected to generate annualized revenue of about C$150 million and operating income before depreciation and amortization margins in line with the L&W segment once Mullen optimizes its business practices, processes and technology.
Due diligence towards a definitive agreement is underway. The parties expect to close the transaction in Q2 2024, subject to regulatory approval.
“The addition of ContainerWorld demonstrates our continued strategic focus of diversifying service offerings into verticals and markets that we consider as great long-term opportunities. Globally, alcoholic beverages is a trillion-dollar industry and here in Canada, it is a multi-billion dollar industry that is expected to grow as the Canadian population grows,” Murray K. Mullen, chair and senior executive officer at Mullen Group, said in a statement.
“ContainerWorld is a leading integrated logistics provider to international and domestic wine, beer and spirits producers that are looking for a safe and reliable customs-bonded service provider in Canada. This acquisition further expands our operations in the provinces of British Columbia and Ontario, home to 50 per cent of Canada’s population, and will add over 1 million square feet of warehousing space to Mullen Group,” he added.
More than 70 years of successful growth by acquisition
Similar to Buffett’s storied history in the stock market – marked by strategic value acquisitions involving household brands such as Dairy Queen, Coca Cola and Apple, as well as a decentralized management system – Mullen Group has managed to carve an analogous path for itself in logistics with 40 business units across North America as of November 2023.
When we count Mullen’s specialized services business catering to the energy, mining, forestry and construction industries in Western Canada, the company generated about C$2 billion in 2022 revenue, including more than C$158 million in net income. Its profitability extends back to 2019, with a net loss in 2018 attributable to a market meltdown and commodities collapse in Q4.
As I intimated in the last Weekly Market Movers, and as Mullen makes crystal clear in its latest investor presentation, the company’s dedication to paying cheap prices for money-making businesses has taken it from a three-truck operation in the 1950s to a key North American player in an essential industry. As such, an allocation to Mullen is worth your full consideration.
Mullen Group is one of Canada’s largest logistics providers across less-than-truckload, truckload, warehousing, logistics, transload, oversized, third-party logistics and specialized hauling transportation.
Mullen Group stock (TSX:MTL) last traded at C$14.03 per share. The stock is flat year-over-year, and has gained 9.44 per cent since 2019.
Join the discussion: Find out what everybody’s saying about this Canadian Berkshire Hathaway on the Mullen Group Bullboard, and check out the rest of Stockhouse’s stock forums and message boards.
The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.