Zero Mountain Inc., a Fort Smith-based cold storage warehousing company, announced Monday its plans to merge with Sioux City, Iowa-based Cloverleaf Cold Storage to become the fifth-largest cold storage warehouse platform in the United States.
The merger places a footprint for the companies in all three major U.S. protein production corridors for beef, pork and poultry.
Together, the companies will offer about 140 million cubic feet of capacity in nine states.
Zero Mountain, founded in 1955 by the Rumsey family, ships more than 2.5 billion pounds of food annually and manages more than 38 million cubic feet of total capacity in five cold storage warehouses, with expansions underway both in North Little Rock and Waco, Texas. It employs more than 225 people with facilities also in Fort Smith, Lowell and Russellville.
Cloverleaf was founded in 1952 by the Kaplan and Feiges families, and currently operates 19 warehouses with over 102 million cubic feet of total capacity, across the Midwest and Southeast, from the Carolinas to Illinois and Minnesota. Cloverleaf serves more than 800 customers, many of whom the company has had a relationship with for more than 30 years.
“Customers look at overall footprint,” Zero Mountain Inc. Chairman Mark Rumsey said in a phone interview Monday following the announcement. “This allows us to preposition products more, and allows us to go forward looking at a different avenue.”
Having Blackstone as a partner through Cloverleaf also likely will increase borrowing power for Zero Mountain. Cloverleaf received a strategic investment by private equity funds affiliated with Blackstone in January 2018.
Mark Rumsey and his son, Joe Rumsey V, CEO of Zero Mountain Inc., will retain leadership roles in the newly combined business.
It is still uncertain, however, if there will be a name change for Zero Mountain, a company that got its start back in 1951 in a limestone cave and has grown to become the 11th largest cold storage business in the nation with the Rumseys at the helm.
According to a company history, Joseph Rumsey III worked for four years along with George Bazore Sr., C.A. Stump and Price Dickson to turn a limestone cave in Johnson into a sub-zero processing and storage vault. In the summer of 1955, ZMI opened its doors and became one of only four facilities of its kind in the country.
Cloverleaf is currently ranked seventh in the nation by the International Association of Refrigerated Warehouses.
The merger is expected to close in 30 to 90 days pending regulatory approval.
Bill Feiges, Co-CEO of Cloverleaf, said in a news release that he and his team have a lot of respect for Zero Mountain.
“I am pleased that these two great companies are joining forces,” Feiges said in a news release. “The Cloverleaf team has long admired Zero Mountain, which has been built over generations by the Rumsey family upon business values similar to our own. Zero Mountain is highly respected in the cold storage industry, and the Rumsey family is known for its longstanding relationships and dedication to customer service. ts geographic footprint is a strong complement to that of Cloverleaf, and we believe that this combination will create significant value for our customers.”
Mark Rumsey echoed those sentiments.
“I am excited that we are able to come together with Cloverleaf to create one of North America’s largest players in the cold storage business,” Mark Rumsey said. “The Cloverleaf team is very well respected in the cold storage industry, and I’m delighted that we have this opportunity to partner with and grow alongside them.”
Existing investors in Cloverleaf — private equity funds affiliated with Blackstone, the Kaplan and Feiges families, and Medley Management — collectively will invest significant additional equity to facilitate the transaction, the release added.