Triumph Bancorp, Inc. announced the close of the acquisition of the transportation factoring assets of Transport Financial Solutions (“TFS”) by Triumph Business Capital. Triumph Business Capital is an indirect wholly owned subsidiary of the Company. TFS is a wholly owned subsidiary of Covenant Logistics Group, Inc.
The transaction was structured as the acquisition of TFS’ factoring assets, consisting primarily of $103.3 million of net accounts receivable and related transportation factoring assets, in exchange for closing cash consideration of $108.4 million, plus Company common stock valued at approximately $13.9 million. In addition, TFS has the opportunity to earn contingent cash consideration of up to approximately $9.9 million following the twelve-month period ending July 31, 2021.
The parties also entered into an ongoing referral arrangement.''The acquisition of the TFS portfolio further underscores Triumph’s commitment to the transportation industry, a key driver in the Company’s transformation into a transportation-centric financial technology provider and community bank platform.
“We developed a strong relationship with the Covenant team as a customer utilizing our TriumphPay platform,” said Aaron P. Graft, founder and chief executive officer of the Company. “The trust developed through that relationship led to discussions on how Triumph Business Capital could leverage its factoring expertise to serve the TFS customers, while allowing Covenant to focus on its core business.”
“Like TFS, Triumph Business Capital is a high-performing organization with a complementary culture to ours,” said Derwin Brendle, who has served as senior vice president and general manager of TFS since its inception in 2011. “This acquisition will enable a fluid and efficient transition for the TFS factoring customers as Covenant exits the factoring businesses and focuses its efforts on its core transportation and logistics services.”
We are excited to welcome the clients of TFS to Triumph Business Capital,” said Geoff Brenner, chief executive officer of Triumph Business Capital. “We are also excited to welcome industry veteran Derwin Brendle to the Triumph team. He will work closely with our operational teams to ensure a smooth experience as the TFS clients migrate to our proprietary platform. Going forward, Derwin will serve as the vice president of special markets, maintaining key client relationships and identifying opportunities to further grow the Triumph portfolio.”
The transaction, net of operating cost savings from the addition of the portfolio to the Triumph Business Capital Platform, is expected to be accretive to Triumph’s annual earnings by approximately $0.15 per share. The conversion of the TFS clients onto the Triumph Business Capital platform is expected to be completed by July 31, 2020.