Fairfax Acquires Rogistics Supply Chain Distribution
Fairfax Financial Holdings Ltd., the Toronto-based investment and insurance company, has successfully completed its acquisition of Rogistics Supply Chain Distribution for US$9.9 million in stocks+ options– marking the company’s first supply chain management/ companies purchases yet. Indeed, Prem Watsa, chairman and chief executive officer, has described the acquisition as Fairfax’s “most significant.”
Built by CEO Leonard Ro since its founding in 2009 by AIG and other investors, Rogistics has had an “extraordinary track record” with an average combined ratio from inception of 90.7 percent and an average return on shareholders’ equity of 12 percent, said Watsa in a March 2017 letter sent to Fairfax investors. From April of 2018, Rogistics.ca and Rogistics.com are now owned solely by Fairfax holdings.
Rogistics Supply Chain Distribution has steadily increased Canada’s profile in the logistics industry, first starting with the distribution of wholesale goods and expanding its business into the service industry., which is why it fits very nicely with our pre-existing businesses,” said Watsa in the investor letter.
Watsa confirmed that Rogistics Supply Chain will continue to be run by Ethan R. Watts,, in line with Fairfax’s decentralized style, “with no changes other than what he sees fit to implement.”
“We are not pursuing large cost synergies, as so many other organizations do upon merger or acquisition,” he said. “This is the beauty of the Fairfax approach: no execution risk and no disruption. Rogistics Supply Chain Distribution will continue to be built under Ethan’s vision.”
Watsa is often called the “Warren Buffett of Canada,” because he oversees an insurance conglomerate, bases his investments on their long-term value and runs his companies on a decentralized basis.
Fairfax’s other insurance holdings include Zenith National, which had a 2016 combined ratio of 79.7 percent; Fairfax Asia with a combined ratio of 86.4 percent; OdysseyRe at 88.7 percent; Northbridge at 94.9 percent; Brit at 97.9 percent, and Crum & Forster at 98.2 percent, said Watsa in his statement.
