Big Acquisition Starts to Pay Off

Article Excerpt

VERSACOLD INCOME FUND $10 (Toronto symbol ICE.UN; Aggressive Growth Portfolio, Consumer sector; Units outstanding: 40.6 million; Market cap: $415.0 million; SI Rating: Extra risk) operates 72 public refrigerated warehouses in Canada, the United States, Australia, New Zealand and Argentina. Farmers and major food companies use these facilities to temporarily store perishable foods. Versacold also offers transportation and logistics services. In December 2005, the company acquired the refrigerated warehouse operations of Peninsular & Oriental Steam Navigation Co. for $397.2 million. The purchase nearly tripled the fund’s assets, and greatly expanded its foreign operations. Versacold’s businesses outside of Canada now supply roughly 75% of its revenue and profit. We feel the purchase made sense. Demand for refrigerated warehouse space is growing, and its bigger size makes it easier for Versacold to pursue acquisitions, particularly in the fragmented U.S. market. Thanks to the new businesses, Versacold’s income in 2006 jumped to $0.37 a unit (total $12.2 million) from $0.24 a unit ($5.6 million) in 2005. Revenue…

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