As a rival trucker heads for a takeover by its founder, analysts predict Trimac Income Fund will be the next trust to be taken private.
Trimac is a national trucking company with a $75-million market capitalization and a controlling shareholder, the McCaig family. The McCaig clan can't be thrilled with market's take on their firm, as Trimac unit touched a 52-week low of $5.64 on Wednesday, and are down 14 per cent so far this year.
ATS Andlauer Income Fund, a trucking trust that's also seen the price of units slide in recent months, drew a $92-million going-private offer on Tuesday from founder Michael Andlauer. The sense on trading desks is unitholders will happily hand the company back to the CEO for the $11.75 a unit that Mr. Andlauer is offering.
In the wake of this offer, RBC Dominion Securities analyst Walter Spracklin pumped out a report Wednesday on Trimac that said: "We consider the likelihood of a take-out transaction by the McCaig family as very high, given the significant drop in unit price and the fact that the McCaig family already directly and indirectly controls approximately 60 per cent of the company."
On a fundamental basis, Mr. Spracklin cut his fundamental price on Trimac units to $6.50 from $8 a unit on Wednesday, a downgrade based on the fact that a weaker economy means fewer trucks will on the road.
However, given what he sees as a high probability of a takeover, the RBC Dominion analyst opted to put a $7.25 target price on Trimac units.