The trucking industry has been consolidating around its strongest players for several years, as witnessed by the growth of serial acquirer TransForce Income Fund. News yesterday that Canada Cartage Diversified Income Fund is in takeover talks kicked off speculation about which other companies in the sector might also be targets. Analysts see a private equity fund as the likely suitor for Canada Cartage, which will fetch about $125-million, though rival Contrans Income Fund is also being mentioned. Taking the process one step further, top-ranked analyst Walter Spracklin at RBC Dominion Securities weighed in this morning on what makes a transportation trust an attractive target. "If we had to speculate as to who we consider to be the next most likely candidates for further consolidation in the freight transportation market, we would focus on companies that serve niche markets, have an attractive asset base, trade at low market multiples, are underleveraged and have a low market capitalization," wrote Mr. Spracklin in a report. And when he screened companies on these criteria, Mr. Spraklin concluded: "We consider Westshore Terminals Income Fund, Livingston International Income Fund and Cargojet Income Fund to be potential targets."A potential Canada Cartage takeover has Mr. Spracklin rethinking trucking deals, which he previously considered less likely than other mergers in the sector. Today, he said: "We consider ATS Andlauer and Trimac to be the next most likely candidates for consolidation within the trucking trust sector, mainly based on their niche market segments."
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