Midwest & Bluegrass Rail Acquisition of Tomken Transportation

 

Industry:  Transportation

Location:  Kansas City, MO

The DVS Group Role: Sellside Advisory

Tomken Transportation (DVS Sellside Client):

Tomken is a transportation/trucking/railroad company based in Kansas City, Missouri. It was one of three divisions, alongside Reload Central (“Reload”) and Lawrence Traffic Bureau (“LTB”). Together they formed an operating company that specialized in transloading: 

  • Receiving shipments of lumber and other large items via rail
  • Taking that freight off of the rail cars and reloading the materials onto over-the-road semi trailers
  • Driving these semi trailers to their final destination within a 100 miles radius of the Kansas City facility

Midwest and Bluegrass Rail (MBR) (Buyer):

MBR is a recently formed holding company that focuses on strategically acquiring private short line rail, spurs, and associated operating companies in the freight and logistics space. They have offices in Kansas City, Missouri and Lexington, Kentucky. 

The Deal:

The Smith family, who owned Tomken, was ready to divest of Tomken and its affiliates in order to refocus on another rapidly growing business owned by the same family. MBR was looking to purchase real estate with a rail spur—a secondary track that allows customers to load and unload rail cars without interfering with other railroad operations.

“The match between motivated seller and strategically synergistic buyer was very compelling,” said Ben Olsen, Managing Partner of DVS.

However, the deal had a surprising amount of complexity for its size. There were environmental issues with the site of the facility (and the real estate was a major element of the deal), complicated tax planning related to the transaction, and multiple rounds of configuring the financing of the acquisition to meet the needs of the buyer.

“The sale process turned out to be longer and more convoluted than anticipated at the outset,” said Olsen. “But despite many challenges and twists, we were able to preserve a strong valuation and a payment structure that represents a significant step forward for the Smith family.”

MBR felt tremendous excitement following the acquisition, reported Olsen. “They look forward to growing the company, creating jobs, and building on the legacy of the Smith family as they expand their network of holdings under the MBR umbrella.”

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