TransForce International (TFI) announced it will be purchasing United Parcel Services (UPS) Freight, the less-than-load (LTL) and truckload divisions, reported by trucknews.com.
These divisions are reported to have earned $3 billion dollars in revenue in 2020.
This purchase will give TFI International what they claim to be the most extensive North American LTL Networks in the United States and Canada.
The purchase was for $800 million U.S. dollars. This deal has been approved by both companies’ boards and will now operate as TForce Freight.
The report says, about 90% of the new business will operate independently within TFI International’s LTL business segment, while the dedicated truckload assets will join TFI’s truckload business unit.
We are pleased to announce this highly strategic transaction that will strengthen our service offerings to customers as well as our ongoing relationship with UPS.
Our strategy of operating independent business units with a high degree of accountability is well-suited for building on UPS Freight’s strengths and improving margins over time. TForce Freight will continue to serve UPS’ ongoing LTL distribution needs, and UPS will continue to provide freight volumes and other services to TForce Freight after the transaction for a base term of five years. We also look forward to offering expanded strategic network opportunities to UPS in Canada. This transaction is a ‘win-win’, allowing TFI to continue our strategic expansion across the US and aligning with UPS’ ‘Better not Bigger’ strategic positioning.
Alain Bedard. Chairman and CEO of TFI International
The deal makes TFI International among the biggest LTL carriers in North America.
This deal, according to Bedard, will “create what we believe to be North America’s single most comprehensive LTL network.”
We’re excited about the future and the opportunities this creates for both UPS and UPS Freight as part of TFI International. The agreement allows UPS to be even more laser-focused on the core parts of our business that drive the greatest value for our customers.
Carol Tomé. UPS CEO
The acquisition includes an agreement for UPS Freight to continue using UPS’ domestic package network to fulfill shipments for a period of five years.
Included in the deal are 197 facilities, 147 of which are owned. TFI said it will also push into the Mexican market, expanding on its existing LTL brokerage operations there.
In particular, we see compelling opportunities to improve TForce Freight’s efficiency and productivity and apply our proven business model to drive long-term value creation. We look forward to the new TForce Freight thriving in the years ahead under the TFI International umbrella.
Alain Bedard
Even though UPS recorded $3 billion in revenue last year, according to the report, was approximately the “breakeven” point.
TFI said it will improve margins through separate management of the LTL and dedicated TL businesses, and through operating efficiencies. It also says it will make targeted investments in the LTL fleet in the first 12 months, lowering maintenance costs while improving efficiency and safety. The deal is expected to close in the second quarter.
This acquisition would be one of TFI’s biggest to date, further shoring up the position as one of the leading full-service supply chain companies in North America and coming closer to competing head-to-head with larger U.S. companies such as Old Dominion and XPO. This gives further credence to TFI’s promise to expand further into the US market in light of larger growth opportunities and less restrictions from Canada’s competition bureau.
Peter Stefanovich. Managing partner of Canadian M&A specialist Left Lane Associates told
AUTHOR COMMENTARY
I have alluded to this in some of my other reports – that more and more buyouts and buyups would occur under this economic “great reset” and paradigm shift.
Truthfully, I did not suspect that UPS Freight was at the breakeven point last year, as I assumed that it probably saw a surplus. Without doing deeper research, I assume this is because of the large increase of users spending from their homes more than ever before, UPS was not able to meet the influx especially considering air travel and sales have been in a massive depression since March of 2020.
But I am reporting on this to show further evidence that the buyouts and mergers will continue to be an even greater trend in 2021 and the subsequent years to follow.
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