Daseke Buying Smaller Peer Aveda for 90 Cents Per Share Plus Incentive

Microcap players that love hearing the word “buyout,” are happy today if they got in oil-rig moving company Aveda Transportation and Energy Services (TSX-V: AVE) anytime in the last year. The Calgary-based company said that it has agreed to be acquired by specialized transportation and logistics company Daseke (NASDAQ:DSKE) for cash or stock, plus a contingency for an additional payout based upon a certain earning milestone being met.

Daseke is paying C$0.90 per share of AVE and assuming Aveda debt, while also agreeing to pay up to an additional 45 Canadian cents per share if earnings meet a certain mark. Aveda investors can take the cash option, trade for DSKE stock at a ratio of 0.0751 Daseke common shares for each Aveda common share held, or take a combination of cash and stock.

The extra earnout payment is based upon Aveda’s earnings before interest, taxes, depreciation and amortization (EBITDA) for the period of either June 1, 2018 to May 31, 2019 or July 1, 2018 to June 30, 2019 (depending on which the companies decide) exceeding $18.0 million. The payout, which will be determined as a multiple of the difference between actual EBITDA and the target, will be capped at C$0.45 per share owned at the time of the deal closing.

With the acquisition, Daseke is adding Aveda’s fleet of about 430 tractors, 660 trailers and 200 light duty trucks to its fleet of more than 5,200 tractors and 11,000 flatbed and specialized trailers.

Separately, Aveda released its 2017 financial report showing revenue of $53.1 million in the fourth quarter, up by nearly 70% from Q4 2016. Adjusted EBITDA for the quarter, which doesn’t include certain one-time items, was $3.6 million, up from about $600,000 in the year prior quarter. Aveda still posted a net loss for the quarter of $2.2 million, or 4 cents per share, improving from a net loss of $6.1 million, or 32 cents per share, a year earlier.

For the full year, revenue was $199.6 million, up 172% from $73.3 million in 2016. Adjusted EBITDA was $15.9 million, compared to a loss of $6.9 million in 2016. Net loss was cut to $8.0 million, or 15 cents per share, from a net loss of $31.8 million, or $1.67 per share, in the year prior.

Shares of AVE have shot ahead on the merger announcement, jumping 71.7% to 91 cents after a short trading halt in morning action for the news. Shares of AVE have been on the slide pretty much since coming public in 2006, including falling from a high of $5.95 in September 2014 before oil prices collapsed.

The stock fell as low as 32 cents in August before staging a modest recovery over the last eight months. The 90-cent buyout represents the highest price for the stock since January 30, 2017.