* Deal valued at $310 mln, including $150 mln debt
* Transaction expected to close by the end of this month
* TransForce says deal to add immediately to earnings
(Adds CEO, analyst comments; updates shares)
By Sneha Banerjee
June 2 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
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
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
"We also note that underlying business fundamentals in the
truckload sector are much more favorable in the U.S. relative to
Canada," he said.
Transport America had filed with U.S. regulators in December
to list its shares on the Nasdaq under the symbol "TRAM." The
initial public offering was expected to raise about $75 million.
The amount of money a company says it plans to raise in its
first IPO filings is used to calculate registration fees. The
final size of the IPO could be different.
TransForce said on Monday that the deal, which was expected
to close by the end of this month, would immediately add to
earnings. The purchase price includes $150 million of Transport
The new business will retain the Transport America brand
name, the company said.
RBC Capital Markets is TransForce's financial adviser for
the deal, while Bank of Americas is advising Transport America.
TransForce's shares rose as much as 1.3 percent on the
Toronto Stock Exchange on Monday morning, but were little
changed at C$23.77 in late morning trading.
(Additional reporting by Anannya Pramanick in Bangalore;
Writing by Sayantani Ghosh; Editing by Kirti Pandey)