Jacksonville-based Patriot Transportation Holding, Inc. (NASDAQ: PATI), a prominent name in the transportation and logistics sector, is set to transition into a private entity following a definitive merger agreement with United Petroleum Transports Inc. (UPT). The Oklahoma City-headquartered United Petroleum Transports, a leading bulk liquid transportation company, will acquire Patriot Transportation in a deal valued at approximately $65.9 million. This strategic move will see Patriot Transportation combine its robust Southeast presence with United Petroleum Transports’ extensive reach in the Western states, creating a powerhouse in the fuel and chemical transportation industry.
The acquisition, announced in early December 2023, marks a significant development for both companies. The unified entity will operate under the United Petroleum Transports umbrella and is projected to rank among the top five bulk tank carriers in North America based on revenue, boasting a combined annual revenue exceeding $200 million. This expansion will result in a vast network of over 1,000 drivers and more than 30 terminals spanning 11 states, from Arizona to Florida.
Patriot Transportation trucks at a terminal
Greg Price, Executive Chairman of United Petroleum Transports, emphasized the strategic alignment and mutual benefits of this acquisition, stating that Patriot Transportation was “the perfect match” for their growth strategy. He highlighted the synergistic potential to “enhance our shared value proposition and invest in exciting growth opportunities providing transportation solutions for new and existing customers.”
Despite the change in ownership, Patriot Transportation’s operations will continue under its well-established brand, Florida Rock & Tank Lines Inc., ensuring continuity for its customers and employees in the Southeast region. Under the terms of the agreement, Patriot Transportation’s shareholders will receive $16.26 in cash for each outstanding share. This price represents a significant premium over the stock’s closing price of $7.68 just prior to the announcement, reflecting the deal’s value and the market’s positive reaction. The announcement spurred a dramatic surge in Patriot Transportation’s stock, highlighting investor confidence in the merger.
Patriot Transportation has a long and distinguished history in Jacksonville, dating back to the 1960s when it originated as part of Florida Rock Industries. In 2015, Patriot Transportation was established as an independent, publicly traded company, separate from Florida Rock’s real estate division, now known as FRP Holdings Inc. While Patriot Transportation has faced some share price fluctuations in recent years, the company has demonstrated strong revenue growth, particularly in recent quarters. This financial rebound is attributed to strategic initiatives, including increased driver compensation, which stabilized its workforce and enabled the company to capitalize on growing demand for transportation services. In its latest quarterly report prior to the acquisition announcement, Patriot Transportation reported a robust net income of $1.18 million, a substantial 42.5% increase year-over-year.
Rob Sandlin, CEO of Patriot Transportation, noted during an investor call in August that the addition of 42 drivers in the first nine months of fiscal year 2023 was instrumental in securing new business and increasing mileage. Tom Baker, Chairman of Patriot’s Board, expressed confidence that the acquisition “rewards [shareholders] for their unwavering support” and recognizes the inherent value and quality of the Patriot Transportation organization.
The merger, already approved by Patriot’s board and key shareholders representing 26.6% of the company’s stock, included a standard “go-shop” period allowing for consideration of alternative acquisition proposals. However, the deal with United Petroleum Transports is firmly on track to close by early 2024.
Looking ahead, Rob Sandlin conveyed enthusiasm for the partnership with United Petroleum Transports, emphasizing the shared values and customer-centric cultures of both organizations. “I believe the combined strength of the management teams will allow us to execute a strategic plan for growth beyond our current footprint,” Sandlin stated, signaling a promising future for the newly merged entity in the competitive landscape of Patriot Transportation and bulk liquid transportation services. The acquisition signifies a new chapter of growth and expanded service capabilities for Patriot Transportation as it integrates with United Petroleum Transports.
