As 2023 concludes, the landscape of North American trucking keeps shifting as liquidating Yellow Corp. sells off more of its terminals and another industry titan beefs up its business with a strategic acquisition.
Canadian transportation and logistics company TFI International, the parent company of less-than-truckload (LTL) company TForce Freight, has agreed to acquire Daseke, an operator of flatbed and specialized trailers, for roughly $386 million in cash.
The Montreal-based TFI will pay $8.30 per share for Daseke, a 69 percent premium to Thursday’s closing share price of $4.91. As part of the deal, TFI will assume a $658 million debt load, valuing the total acquisition at approximately $1.1 billion.
The transaction is expected to close during the second quarter of 2024, said Daseke, an Addison, Tex.-based company that specializes in heavy-haul transportation with a fleet of more than 4,500 tractors and 10,500 flatbeds. Along with the tractors and flatbed, TFI will acquire Daseke’s 1 million feet of warehouse space.
After the merger, Daseke will continue to operate its portfolio of brands as part of TFI’s truckload segment, which is expected to generate about $3.6 billion in annual revenue when including Daseke’s revenues for the full year.
“Daseke’s deep expertise in servicing a broad portfolio of specialized and industrial end markets such as high-security cargo, agriculture, manufacturing and construction, is critical given the relative strength of specialized market dynamics today,” said Alain Bédard, chairman, president and CEO of TFI International in a statement. “Our immediate focus will be on improving Daseke’s financial results, with the strategic consideration to follow and be ongoing.”
Over the medium term, TFI expects to evaluate the potential benefits of separating into two distinct public companies—one comprising the truckload segment, and one comprising its three other segments: LTL; package and courier; and logistics.
TFI, which has a market cap of $11 billion, has seen much of its growth come in recent years through acquisitions. The company scooped up UPS’ LTL business, UPS Freight, for $800 million in 2021 and rebranded the unit to TForce Freight.
TFI had invested about $100 million in mergers and acquisitions (M&A) this year as of the company’s October Q3 earnings call, obtaining a fixed-rate $500 million private placement “to get a little bit more dry powder” for acquisitions in 2024, Bédard said at the time.
Acquisitions this year have included regional carriers such as Nebraska-based Dahlsten Truck Line, Canada-based Siemens Transportation Group and Wisconsin-based Hot Line Freight Systems.
But Bédard had been hinting at something bigger.
“We’re well positioned to do something of size in ’24,” Bédard said in the October call. “Now, it’s always the same story with TFI. There’s not just one file that we’re working on. There are always more than one. I think that the possibility of doing something of size in ’24, I would put that at 65 percent, 75 percent.”
In April, Bédard had addressed rumors that TFI was seeking to acquire ArcBest, the parent of direct LTL competitor ABF Freight, saying that he wanted to wait until both companies had new contracts in place for their Teamsters-represented union employees before considering any deal. Both deals were ratified in July.
TFI management expects the transaction to be earnings per share (EPS) neutral in 2024, and accretive by at least 50 cents per share in 2025 based on current market conditions.
Daseke’s board of directors unanimously approved the takeover.
Yellow auctions off 23 leased terminals
TFI won’t be the only trucking business that is expanding its footprint for 2024.
A second slate of Yellow’s terminals has been awarded to new bidders, as 23 properties formerly leased by the now-bankrupt trucking company are now in the hands of various other LTL businesses.
Going for a combined $82.9 million, the total value of the terminals came in well below the $1.88 billion in combined winning bids for 130 terminals auctioned off earlier this month.
Estes Express Lines led the way, spending $35.3 million to outbid others for five properties, after previously winning 24 terminals for a combined $248.7 million.
FedEx Freight, which did not place a bid in the first auction, was able to snag one terminal near Reno, Nev. for $22.5 million.
Four other parties grabbed the remaining 17 terminals. Ramar Land Corp., owner of R+L Carriers, landed three terminals valued at $9 million. The carrier took home $211.5 million in real estate in the first auction.
Saia, won 11 sites at a combined $7.9 million, following up its haul of 17 terminals for $235.7 million earlier this month. ArcBest won the rights to one property in Bethlehem, Pa. at a value of $7.8 million and Knight-Swift collected two properties at more than $400,000 in Montana and Washington.
A court hearing on the leased properties sale is scheduled for Jan. 12.
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