Wall Township bus company acquires one of Canada’s largest bus operators
STA was formed in 1997 by Wall resident Denis Gallagher, who began his 30-year student transportation career at New Jersey’s Coast Cities School Buses, founded in 1922 by his grandfather and father.
Mr. Gallagher rose to president and CEO of Coast Cities and helped grow the company to the largest privately-held school bus company in New Jersey before it was sold to Laidlaw in 1987. Mr. Gallagher joined Laidlaw as a vice president at the time of the sale and rose to Sr. Vice President of Operations before leaving to create STA in 1996.
The purchase, valued at C$41.8 million, boosts STA’s Canadian revenue by 67 percent, increases existing cash flow by 15 percent and expands STA operations in the rapidly growing Golden Horseshoe region surrounding Greater Toronto.
“We are pleased that more than 93 percent of Canadex shareholders have supported and approved the transaction by tendering their shares in connection with the offer,” said Mr. Gallagher. “We intend to acquire the remaining shares by exercising our statutory right of compulsory acquisition under Ontario’s Business Corporations Act and then apply to de-list the Shares of Canadex from the TSX.”
With 2007 revenues of C$24 million and EBITDA of C$11.2 million, STA acquires two separate and distinct Canadex business segments.The school bus transportation division will continue to operate under the name Parkview Transit, which is a highly stable contracted business with strong cash flows. The smaller energy division, with non-operating oil and gas minority interest investments in the United States, is non-core to STA’s business and will be subject to further review by STA’s board of directors and management team to determine a course of action in the best interest of STA shareholders.
“This is a great acquisition for us,” Mr. Gallagher said. “Parkview Transit’s school bus operations are a perfect fit with our existing operations and add to our core strategy of building regional density in Ontario. One hundred percent of Parkview’s home-to-school contracts include fuel price protection which has been an important part of our negotiations.”
The Canadex acquisition makes STA the fourth largest provider of school transportation services in Canada with nearly 1,000 buses and some C$40 million in annualized revenue.
“Building on our strategy of continuous growth and profitability through acquisitions, bids and school district conversions, Canadex marks the 31st acquisition since our inception in 1997.” Mr. Gallagher said. “It significantly increases our Canadian dollar cash flows at a time when the Canadian dollar is close to par with the US dollar. Moreover, it provides additional support with our currency hedges which are currently in place for the next 60 months in support of our annual Canadian distributions.”
With oil and gas prices increasing worldwide, Mr. Gallagher said his company already has been contacted by several parties interested in discussing various strategic alternatives for the newly acquired energy division.
Looking ahead, however, Mr. Gallagher said STA remains focused on excellent execution of the fundamentals of school bus transportation.
“Our core mission remains the same – to safely and cost effectively transport children to and from school each day, on time,” Mr. Gallagher said. “Parkview Transit customers can look forward to the same drivers, with the same buses, driving the same routes. We are pleased to welcome these great drivers, mechanics, safety trainers, dispatchers, terminal managers and all Canadex employees to the STA family of companies.”
