Canada's TransForce to buy U.S. truckload transporter
By Sneha Banerjee
(Reuters) - Canadian trucking company TransForce Inc said it would buy truckload company Transport America Inc from private equity firm Goldner Hawn Johnson & Morrison Inc in a $310 million deal to benefit from higher pricing in the United States.
TransForce has been trying to boost its truckload business to battle rising competition, which hurt volumes and squeezed margins in 2013. The business accounted for 13 percent of the company's total revenue last year.
"The truckload market in the U.S. is very different than the one in Canada," TransForce Chief Executive Alain Bedard said on a conference call.
"There is definitely organic growth over there. Here in Canada, it is still slow. Much better than last year though, but volume is still slow."
Transport America's network includes 12 terminals in the United States. The company operates about 1,500 tractors and about 4,400 trailers through its own fleet and independent contractors.
Eagan, Minnesota-based Transport America reported total operating revenue of $347.5 million in 2013, down more than 4 percent from 2012. The company's net profit, however, surged 80 percent to about $7 million in the period.
Bedard said on the call that he expected Transport America's revenue to increase to around $400 million between July 1, 2014 and July 1, 2015.
"With limited opportunities to acquire substantial truckload businesses within Canada, we believe this transaction is consistent with TransForce's strategy for its (truckload) business," BMO Capital Markets analyst Fadi Chamoun said in a note. Continued...