Canadian transportation and logistics company TransForce Inc (TSX: TFI) has acquired the North American truckload operation of XPO Logistics Inc (NYSE: XPO). Transforce will pay about US$558 million in cash for the asset, XPO disclosed in a separate statement. Transforce said the acquisition will expand its truckload logistics services and is expected to generate annual revenue of about US$530 million this year. U.S.-based XPO is backed by Jacobs Private Equity and several institutional investors, including Ontario Teachers’ Pension Plan and Public Sector Pension Investment Board. It said it will use the sale’s proceeds to reduce debt.
TransForce announces the acquisition of the North American truckload operation of XPO Logistics
Important transaction makes TransForce a leading player in the U.S. Truckload sector
MONTREAL, QUEBEC–(Marketwired – Oct. 27, 2016) –
TransForce Inc. (TSX:TFI)(OTCQX:TFIFF), a North American leader in the transportation and logistics industry, today announced that a wholly-owned subsidiary of TransForce has acquired the North American truckload operation of XPO Logistics, Inc. (NYSE:XPO). The acquisition represents an important expansion of TransForce’s truckload (“TL”) and logistics services across North America.
With an operating history of over 60 years, the acquired business is a top 20 carrier headquartered in Joplin, Mo. The business provides an integrated offering of point-to-point dry-van TL transportation services across the United States, and is one of the largest service providers of cross-border trucking into Mexico. The business has an extensive U.S. network, including 29 locations, approximately 3,000 tractors and 7,500 trailers through a combination of owned fleet and independent contractors.
The acquired business is expected to generate annual revenue of approximately US$530 million and EBITDA, a non-IFRS measure (see “Non-IFRS Measure” section below), of approximately US$115 million in 2016. Combined with TransForce’s current U.S.-based TL operations, the acquisition provides the Company with annual U.S. TL run rate revenue of nearly US$850 million.
The acquisition is partially financed with TransForce’s existing revolving credit facility and a new CA$500 million acquisition facility which was fully underwritten by National Bank of Canada and Royal Bank of Canada as Co-Lead Arrangers and Joint Bookrunners.
Alain Bédard, Chairman, President and Chief Executive Officer of TransForce, stated the transaction creates several benefits. “This acquisition significantly strengthens TransForce’s presence in the North American truckload landscape with prominent market positions in domestic US and cross-border Mexico freight. The acquisition complements our existing capabilities and gives us access to a diversified and blue-chip customer base. We have acquired a high quality truckload business with a rich heritage and demonstrated solid operating and financial performance. We believe we are investing into the truckload space at a critical time and are well-positioned to benefit from future growth opportunities.”
Friday October 28, 2016 at 10:00 AM, Eastern time
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TransForce Inc. is a North American leader in the transportation and logistics industry, operating across Canada and the United States through its subsidiaries. TransForce creates value for shareholders by identifying strategic acquisitions and managing a growing network of wholly-owned operating subsidiaries. Under the TransForce umbrella, companies benefit from financial and operational resources to build their businesses and increase their efficiency. TransForce companies service the following segments:
Package and Courier;
TransForce Inc. is publicly traded on the Toronto Stock Exchange (TSX:TFI) and the OTCQX marketplace in the U.S. (OTCQX:TFIFF).
Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of TransForce. These statements are based on suppositions and uncertainties as well as on management’s best possible evaluation of future events. Such factors may include, without excluding other considerations, fluctuations in quarterly results, evolution in customer demand for TransForce’s products and services, the impact of price pressures exerted by competitors, and general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.
EBITDA is a financial measure not prescribed by IFRS and is not likely to be comparable to similar measures presented by other issuers. EBITDA represents earning before interests, income tax, depreciation and amortization. Management considers it to be useful information to assist investors in evaluating the Company’s profitability and ability to generate funds to finance its operations. That measure does not have any standardize meaning under IFRS and could be calculated differently by other companies. That measure should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with IFRS.
Chairman, President and CEO
Photo courtesy of XPO Logistics Inc