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Lineage Logistics to acquire GTA-based VersaCold

UPDATED: VersaCold Logistics Services, one of Canada’s largest cold-chain logistics and distribut...

IMAGE: A VersaCold distribution centre in Milton, Ont.

A VersaCold distribution centre in Milton, Ont.

UPDATED: VersaCold Logistics Services, one of Canada’s largest cold-chain logistics and distribution networks, is being sold to U.S.-based Lineage Logistics by TorQuest Partners, The Investment Management Corporation of Ontario (IMCO) and OPTrust, which acquired the company two years ago.

Financial terms of the transaction were not announced, but when TorQuest and its partners acquired VersaCold in 2020, published reports indicated that transaction was valued at over $600 million (all figures Cdn). TorQuest has also indicated it is investing in Lineage, as part of the transaction.

VersaCold operates a nationwide network of 24 temperature-controlled facilities comprising 114 million cubic feet of storage and 361,000 pallet positions. Its facilities are located in nine provinces and include properties in Canada’s largest metropolitan markets—including Toronto, Calgary, Vancouver, Edmonton, and Montreal.

VersaCold also offers an integrated temperature-controlled transportation network operating out of nine of its terminals and providing coast-to-coast service capabilities.

The company was founded in 1946 and is headquartered in Vaughan, in the Greater Toronto Area.

Lineage expands Canadian presence

“Our acquisition of VersaCold represents yet another milestone and an important broadening of our business in Canada,” said Greg Lehmkuhl, president and CEO of Lineage Logistics, in the announcement Wednesday morning. “We also look forward to supporting capacity expansion plans at a number of warehouses across key Canadian markets.”

The firm acquired its first temperature-controlled Canadian properties in 2020, when it bought Ontario Refrigerated Services, a firm with four facilities in the Toronto and Southern/Central Ontario region. The acquisition gave Lineage 16.2 million cubic feet of capacity and 100,000 pallet positions.

It also acquired Marc Villeneuve Inc., a cold-storage firm with a facility in Greater Montreal.

Lineage Logistics is one of the world’s largest temperature-controlled industrial REITs and logistics solutions providers. It has a global network of over 400 strategically located facilities totalling over two billion cubic feet of capacity in 19 countries across North America, Europe and Asia-Pacific.

Lineage’s experience and expertise in end-to-end logistical solutions, its real estate network, and development and deployment of innovative technology help increase distribution efficiency, advance sustainability and minimize supply chain waste.

“We look forward to embarking on this journey with Lineage Logistics,” said Mike Arcamone, president and CEO of VersaCold, in the release. “Lineage has emerged as a world leader in creating innovative solutions to help reduce waste across the temperature-controlled supply chain.

“Combining our seasoned team and our complementary facility network with Lineage will create an even more dynamic company . . .”

Oxford, BentallGreenOak investors in Lineage

Investors in Lineage include Canadian entities Oxford Properties and BentallGreenOak, both significant contributors to a $2-billion-plus financing round undertaken by Lineage in 2020, and another offering which raised about $2.4 billion in 2021.

The acquisition is expected to close in the third quarter of 2022 subject to what Lineage calls customary closing conditions.

“TorQuest has enjoyed our partnership with Mike (Arcamone) and the VersaCold team, and the opportunity to provide capital to invest in and reposition its facility network for the future” said Jonathan Fraser, partner at TorQuest, in the announcement. “VersaCold has thrived under our ownership, and we are very pleased to have Lineage step in to drive the next chapter for the business.

“We are also excited to be investing in Lineage as part of this transaction and for our investors to participate in future value creation.”

Founded in 2002, TorQuest Partners is a Canadian-based manager of private equity funds with over $3.5 billion of equity capital under management.

TorQuest is currently investing from TorQuest Partners Fund V, a $1.4-billion fund that closed in March 2020. The firm invests in middle-market companies and works in close partnership with management to build value.

The acquisition is expected to close in the third quarter of 2022 subject to customary closing conditions.

Wells Fargo Securities, LLC acted as the exclusive financial advisor to VersaCold and TorQuest and Stikeman Elliott LLP served as legal counsel. JP Morgan Chase and Scotiabank acted as Lineage’s financial advisors and Latham & Watkins as well as Bennett Jones acted as its legal counsel.

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