The third-largest private school bus contractor announced that it expects to realized an 11-percent, year-over-year growth in revenues after signing four separate letters of intent to purchase regional competitors.
In a statement, STI said the transaction will increase the contractor’s national fleet by more than 150 school buses. While the names and locations of the four companies being purchased were not released at this writing, the combined operations were expected to add annual revenues of $7.8 million to the company’s balance sheet.
“These acquisitions while small in size strengthen our existing operating locations by adding regional density to those areas,” said Denis J. Gallagher, chairman, chief executive officer and founder of STI. “We plan on continuing the excellent service these companies have delivered and to provide our added value and expertise in safety and community service. They have very good drivers, top notch maintenance and support staff, and customers who value safe and reliable local service.
Gallagher added that existing fuel protection clauses in place at the new contract locations was “an important criteria” in entering the deal, which was expected to close before the start of the 2011-2012 school year next month. Management said the transactions will be immediately accretive to shareholders of its common stock upon closing and will be consistent with margins and purchase price multiples of previous acquisitions.
Editor’s note: A previous version of this article indicated shareholders would recieve shares immediately upon the closing of the transaction. This deal is an accretive acquisition, meaning that pending acquisitions should increase STI’s earnings per share.