ATC Technology Engineers A Go-Private Deal For $512 Million

Founded in 1898, GENCO is one of the leading logistics operators in the US and Canada. As a testament to its long-term perspective, the company's CEO, Herb Shear, has been a part of the company since 1971.

GENCO is privately held and as a result, it is not easy to get a sense of its financials. Even so, it's clear the company has considerable resources as it has agreed to pay $512.6 million for rival ATC Technology (ATAC). The deal comes to $25 per share or a hefty 43.4% premium over the closing price on Friday.

There are various conditions to this transaction, including debt and equity financing and shareholder approval; the deal is expected to close in the fourth quarter. Private equity firm Greenbriar Equity Group plans to invest $125 million and PNC Bank and Wells Fargo Bank are expected to provide $450 million as a line of credit.

A Look at ATC

Back in the mid 1990s, ATC got its start to focus on acquiring companies within the drivetrain remanufacturing industry. Within two years the company was trading on NASDAQ, which gave it public currency to pull off deals.

Over time, ATC evolved its business and began to focus on logistics, especially for the technology and automotive industries. Some of the it provided services included fulfillment, testing, packaging, warehousing and transportation management.

Despite its quality operations, ATC has had trouble lately. In the latest quarter, revenues fell by 7.9% to $104.5 million.

Why? A key reason is ATC's smartphone business with AT&T (T). The phone giant has seen increased quality and customer acceptance, which means fewer returns. ATC provides the repair, kitting and packaging services for AT&T.

Another Bidder?

In the merger agreement, ATC has a solicitation provision that allows the company to actively seek other bids for the next month. No doubt, the industry has a variety of large players that can make a deal.

However, in light of the short time period -- as well as the premium price -- another bid does not appear likely. And Wall Street seems to agree, with ATC's stock price trading below the current buyout offer.