US-based multimodal services provider Hub Group has agreed to acquire dedicated trucking company Estenson for $306m.

Hub chairman and CEO David Yeager said his company had been searching for an acquisition in this market segment for the past two years, to help it provide “a more complete multimodal solution”.

Hub’s top 30 clients spend more than $2 billion a year on dedicated services, he added. “We believe that cross-selling opportunities are in excess of $100m in the next five years,” said Yeager.

The acquisition price, excluding certain recent asset purchases made by Estenson, was agreed at a multiple of 6.75 times Estenson’s 2016 adjusted earnings before interest, tax, depreciation and amortisation (Ebitda). Estenson generated revenue of $250m last year while Hub Group’s turnover was $3.6 billion.

Following the closing of the transaction, which is expected in July, the business will be named Hub Group Dedicated Services and will operate as part of Hub Group Trucking. Co-founder and CEO Tim Estenson will remain in his current role.

Estenson has over 1,200 tractive units and 5,000 trailers operating at approximately 120 customer locations. Hub will have more than 3,800 tractive units after the acquisition.

The move follows news in April that two of the US’s largest trucking companies, Knight Transportation and Swift Transportation, had agreed to a $6 billion all-scrip merger deal. The combined group will own some 23,000 tractors and 77,000 trailers and will generate revenue of $5.1 billion.

According to PWC’s Global Transportation and Logistics M&A Deals Insights report, published earlier this year, deals in the trucking category were on the rise globally in 2016, contributing to the highest share of deal value and generating the highest average deal size of all the transportation and logistics sectors last year.

The latest quarterly update from the professional services firm said a consolidation trend might well continue this year.

“The recent Swift-Knight merger announcement suggests that the consolidation forces in the trucking category will continue to drive deal activity,” said the first quarter 2017 PWC report.

Kristopher Hopkins, senior vice-president of the Transportation & Logistics Group at Houlihan Lokey in New York, was also positive on M&A in the trucking space when he spoke to Automotive Logistics recently.

He said this was due to an improved outlook for the sector after a tepid freight environment over the past couple of years.

“My expectation, based on discussions with trucking executives, is that in the freight markets, volumes and pricing will increase, probably starting in the second half of this year,” said Hopkins.

“These improvements are not going to be in a linear fashion – you might have some fits and starts along the way,” added the investment banker.