Transportation deals: Fenway acquires Preferred Freezer Services LLC

NEW YORK—Private equity firm Fenway Partners said this week it has acquired a majority interest in Preferred Freezer Services LLC, a Newark, New Jersey-based public refrigerated warehousing provider.

Financial terms of the transaction were not disclosed.

Fenway officials said Preferred Freezer is the fifth largest company and one of the largest in the public refrigerated warehousing industry in the U.S. It has 23 facilities in the U.S.—focusing on frozen seafood—and it is currently expanding into other categories. The company is in development in six new facilities in core and new markets, with five other facilities in pre-development, according to Fenway. Preferred also has secured key strategic port locations on China and Vietnam as part of an international expansion strategy.

Fenway Partners Managing Director and Co-Head of its Transportation and Logistics Practice Marc Kramer told LM that Fenway has built a relationship with John Galiher, Preferred Freezer Founder and CEO, for almost two years and have been consistently impressed with his innovative approach to this market niche.

Kramer said that during this time Fenway saw the power of his differentiated business model built around state of the art facilities, strategic geographic locations and unsurpassed customer service.

“Preferred is the fastest growing, most energy and labor efficient business model in the PRW sector and has many attractive touch points for what Fenway looks for in an investment, namely—business model that is or can become the industry leader, strong management and operating platform capabilities, potential for accelerated growth, and ability to link to other aspects of Fenway transportation and logistics portfolio,” said Kramer.

Regarding Preferred’s international expansion, Kramer commented that the Asian expansion opportunity as part of China’s critical infrastructure to build out its cold chain capabilities is consistent with Fenway’s internal transportation and logistics strategy to more actively link its existing portfolio to increasing international opportunities.

“Given Fenway’s niche focused approach in transportation and logistics, Preferred is a strong addition to our portfolio,” he said.

According to Kramer, Preferred Freezer Services currently services more than 2,000 customers, has no customer concentration issues and services both small and large customers, including some of the largest cold chain users globally.

In terms of how this deal will affect current Preferred customers, Kramer said the day-to-day impact on service offerings will be minimal, adding that there will be expanded opportunities for long-term growth.

“The biggest impact to the company prospectively will be a strengthened balance sheet to allow management to invest in additional operating platform resources and capabilities to support an aggressive facility expansion plan both domestically and internationally,” he said.

And along with Fenway’s strong capabilities in transportation, Kramer explained there will also be an expanded service offering to Preferred’s customers to provide inbound and outbound transportation services integrated with its storage and handling capabilities.

This acquisition represents the 28th one Fenway has made in the transportation and logistics space, noted Kramer.