Covenant Logistics completes acquisition of Lew Thompson & Son

On April 26, 2023, the Company completed the acquisition of Lew Thompson & Son, of Huntsville, Arkansas. Under the terms of the agreement, Covenant purchased 100% of the outstanding stock of Lew Thompson & Son in exchange for a closing enterprise value of approximately $100 million plus an earnout of up to $30 million depending on the results achieved by the business over the three following calendar years. The closing price represented approximately 5.2 times estimated adjusted EBITDA of the acquired companies and was funded by cash on hand of approximately $45 million and approximately $55 million of borrowing’s from the Company’s ABL credit facility. Following the transaction, Covenant’s pro-forma net indebtedness is expected to be approximately $165 million. Lew Thompson & Son specializes in poultry related feed and live haul freight and will be consolidated within the Company’s Dedicated truckload results. For 2022, the acquired business generated approximately $64 million in revenue. The transaction includes the option for the Company to elect a Code Section 338(h)(10) election subject to a purchase price adjustment. The addition of Lew Thompson & Son is expected to be immediately accretive to earnings per diluted share.