An American private equity firm has bought a 49% interest in the parent company of Vancouver-based Versacold for an undisclosed sum.
The Yucaipa Companies, a $30 billion investment firm based in Los Angeles, purchased its minority interest of Eimskip Tango ehf from Iceland-based shipping giant Eimskip and has the option to buy the remaining 51%.
Since September, Eimskip had been looking to sell Versacold, which continues to be a profitable entity, to help reduce the company's debt accumulated from a multi-year acquisition spree that included buying several cold storage businesses in North America and Europe.
Yucaipa said its Versacold acquisition will complement its network of temperature-controlled transportation and warehousing services. It owns Americold RealtyTrust, which is the largest public refrigerated warehouse operator in the U.S. with 102 facilities and 6,100 employees.
Versacold operates 123 facilities in Canada, the U.S., Australia, New Zealand and Argentina. It has 9,500 employees and recorded 2008 revenue of $1.2 billion.
Americold and Versacold will continue to operate as independent businesses with separate and distinct boards of directors.
Versacold CEO Brent Sugden said the sale is a great outcome for the company because Yucaipa is familiar with the sector and has the resources to help expand the business. In October, Sugden noted that Eimskip would not be rushed into a fire sale of the company, despite Eimskip's difficult financial position.
It didn't sell Versacold late last year because bids for the company were lower than expected. Yucaipa was one of the original bidders, but was willing to participate in Eimskip's reorganization to help facilitate Versacold's sale.
As part of the deal, Yucaipa has acquired a $194.9 million loan Eimskip held with ABN Amro, the value of which contributed to a portion of the purchase price for the 49% stake in Versacold.
Eimskip, which has had mixed results in the cold storage business since it entered the sector in 2006, will exit cold storage as a result of the deal and focus on its shipping and logistics business based in Iceland.
While the acquisition of Atlas Cold Storage in 2006 and Versacold in 2007 created a profitable global business in Versacold, Eimskip's moves in Europe were devastating for the company, which struggled amidst the global financial crisis that escalated last September and the economic fallout since.
Eimskip reported a $248.2 million loss in its 2009 second quarter, up from a first-quarter loss of $65.3 million.