VSE Corp. [VSEC] June 6 said it closed on the acquisition of Wheeler Bros. Inc. (WBI), a privately held supply chain management company headquartered in Somerset, Pa.
WBI supplies vehicle parts to the the Defense Department and the U.S. Postal Service (USPS).
The purchase price is approximately $180 million in cash, subject to adjustment based on closing net working capital, with the potential additional payments of up to $40 million, if certain financial targets are met during the first four years after completion of the acquisition.
For the year ended September 30, 2010, WBI recorded revenues of approximately $158 million and pretax income of approximately $31 million. WBI has about 185 employees.
VSE CEO and President, Maurice “Mo” Gauthier said, “We are very excited to have WBI join the VSE team. The strategic advantage of integrating a world class supply chain management competency into our traditional DoD offerings is greatly enhanced by WBI’s superb reputation in the U.S. Postal Service fleet management market. This synergy is what drew our two companies together at the outset.”
Wheeler management will stay on. Dave Wheeler remains WBI CEO. Randy Davies, currently vice president of Operations, will become WBI’s president and chief operating officer.
Wheeler said, “Our two companies have been in business for five decades each, and we both share the core cultural values of integrity, loyalty to our employees and dedication to our clients. We have already identified VSE pipeline opportunities which would otherwise be unavailable to us. Likewise, VSE’s capabilities are very well suited to the needs of our U.S. Postal Service vehicle fleet management market.”
The acquisition of WBI will add supply chain management to the work VSE has historically performed to extend the life of military ships, vehicles, aircraft and their installed systems, the company said in a statement.
Like VSE’s other subsidiaries, WBI will support VSE’s strategic initiative to expand its business base into the civil sector of the federal government. In both government and commercial fleets, operating budgets are making near term fleet replacements unlikely, thereby increasing the demand for service life extension of existing assets.
In connection with its acquisition of WBI, VSE entered into a five-year $250 million senior credit facility with a bank group that includes a $125 million revolving credit facility and a $125 million term loan.