Trucking company operator Transforce Income Fund is making another acquisition, this time buying Canadian Freightways Ltd. from its insolvent U.S. parent for $69.6-million, a deal that will boost Transforce's annual revenue by about one-third.
Montreal-based Transforce, Canada's largest publicly owned trucker, said yesterday that it also will assume about $15-million in loans and credit facilities.
Consolidated Freightways Corp., Canadian Freightways' money-losing parent, is based in Vancouver, Wash., and has been under court protection from its creditors since last September.
The deal with Transforce was approved Monday by the United States Bankruptcy Court in Los Angeles.
Canadian Freightways, which is based in Calgary, is not under bankruptcy protection in either Canada or the United States. It has operations in both countries, about 1,500 employees, is profitable and had revenue of $236-million in its previous fiscal year - making it Transforce's largest acquisition to date in terms of revenue.
Transforce, which currently has 5,200 employees and about 8,300 trucks and trailers, said it plans to operate Canadian Freightways as a separate division and retain both its work force and its management, under the leadership of president Darshan Kelly.
Backed by a financial partner, senior managers of the Calgary trucker reached an agreement in principle last March to buy the company from Consolidated Freightways for $90-million (U.S.). However, the deal fell apart in April.
Transforce chief executive officer Alain Bédard, who was not available for comment yesterday, said in a statement that the acquisition will provide "unparalleled coverage" to customers as well as "increase our range of services and significantly augment our business."
Transforce reported a profit of $18.6-million or 29 cents a share on revenue of $374.7-million for the six months ended June 30. This suggests the latest acquisition will boost its revenue for 2003 as a whole to close to $1-billion.
The Montreal firm, which converted itself to an income fund last year, has been growing rapidly by acquisition.
Among its other major deals, it bought Canpar Transport Ltd. (with revenue of $140-million) last year for $39.5-million, and TST Solutions Inc. (revenue $170-million) for $85-million two years before that.
Both Canpar and TST were based in Mississauga.