Roadrunner Transportation Systems Inc. is selling its Prime Distribution Services business to C.H. Robinson Worldwide as it continues to downsize in the wake of an accounting scandal last year. Plainfield, Indiana-based Prime Distribution Services provides retail consolidation solutions, with five food-grade warehouses in the U.S.

The $225 million cash transaction, subject to customary purchase price adjustments, customary closing conditions, and regulatory approval, is expected to close by the end of the first quarter.

“The divestiture of Prime Distribution Services is a unique opportunity for us to significantly improve our balance sheet by paying off all borrowings under our ABL and Term Loan Credit Facilities," explained Curt Stoelting, CEO of Roadrunner. "We believe we are well positioned to execute our strategy of simplifying our portfolio by investing in our remaining Ascent Global Logistics, Active On-Demand and asset light LTL segments. We also believe that our stronger balance sheet will enable us to pursue additional value-creation opportunities, such as incremental organic business expansion and tuck-in acquisitions.”

Last fall, Roadrunner announced it would downsize its unprofitable dry van business, part of the company’s truckload segment, and then sold off its intermodal services.

C.H. Robinson recently reported disappointing 2019 earnings. According to a recent Star Tribune article, excess capacity and weak demand, leading to price adjustments in the trucking industry last year, caused C.H. Robinson to see decreases in revenue and earnings. Net revenue for the company's North American Surface Transportation segment fell 23.2% in the quarter, but volumes were flat in the truckload portion and up 4.5% in less than truckload.

The company plans on investing $1 billion on technology investments over a five-year period to help it better manage freight cycles. Also, it recently unveiled the C.H. Robinson Labs, “an innovation incubator that will leverage data science teams” located in Minneapolis, Chicago, Silicon Valley, and Warsaw.

Prime Distribution Services had revenues of $108.7 million in 2019.

“We have great respect for C.H. Robinson, its management team and employees," added Stoelting. "We know the C.H. Robinson team shares our commitment to customers and is dedicated to providing quality logistics services that help customers operate and grow their business."