Legacy Supply Chain Services: Acquisition of U.S. and Canadian Subsidiaries of Vitran, Inc.

Legacy is one of the fastest-growing integrated supply chain services and logistics companies in the US and by the end of 2012 had 18 state-of-the-art warehouse and distribution facilities throughout the US in 13 different states. It was in discussions with Vitran, Inc., a publicly-traded company based in Toronto, to buy certain of Vitran’s US (4) and Canadian (5) subsidiaries, namely those that were involved in the supply chain operations business. The final deal terms provided for a purchase price of approximately $100 million and Vitran required that the deal close on a very compressed time frame (the letter of intent was dated December 26, 2012 and the closing date was stipulated as January 31; that was extended to March 1 and then March 4, when it closed). The acquisition would increase Legacy’s size by 60%.

Verrill Dana was selected to be Legacy’s primary counsel for this deal on the same day that they signed the letter of intent with Vitran. Further complicating the deal was the fact that Legacy was not contributing any equity, but needed to negotiate financing for 100% of the purchase price plus on-going financing for operating the business after the closing. Legacy also needed Canadian counsel since the acquisition documents were to be governed by Ontario law and about 35% of the business being acquired was located in Canada. Based on the location and nature of the deal, Verrill Dana coordinated with a Toronto-based law firm to engage Legacy as special Canadian counsel.

The primary tasks included: negotiating a Stock Purchase Agreement with seller’s counsel (McMillan in Toronto); conducting due diligence on the subsidiaries being acquired; coordinating due diligence on the existing Legacy companies for the lenders; negotiating fee agreements and commitment letters for the senior secured debt with senior lender’s counsel and for the subordinated debt with their counsel, and then negotiating the senior loan documents and the security documents; negotiating the subordinated, unsecured debt; reviewing and revising schedules for the Stock Purchase Agreement and preparing and updating the schedules for the senior and subordinated loan documents; preparing and revising all of the ancillary documents for the acquisition and for the loan transactions; working with Legacy’s existing local counsel for Texas and Nevada and their existing labor/employment counsel, and arranging for local counsel in California, Kansas and Indiana, and working with each of them to address any local law issues and to prepare and finalize the local counsel legal opinions required by the senior and the subordinated lenders; negotiating and finalizing our own legal opinions for the seller, the senior lender and the subordinated lender; coordinating/supervising special Canadian counsel; designing and creating a corporate restructuring of the existing Legacy company to address lender concerns; evaluating whether Hart-Scott-Rodino pre-filing and clearance would be required.

UPDATE: This transaction was named as M&A Advisor’s 2013 Retail Manufacturing/Distribution Sector Deal of the Year, and was nominated for Cross-Border Deal of the Year and M&A Deal of the Year (Over $75mm to $100mm).