Montreal-based TransForce – one of North America’s largest trucking operations – has struck a deal with the owner of Transport America, which is a portfolio company of Goldner Hawn Johnson & Morrison, to buy the Eagan, MN-based truckload carrier for $310 million, including the assumption of about $150 million in debt. Transport America, which operates about 1,500 tractors and 4,400 trailers, will continue to operate under its current name. The transaction is subject to customary closing conditions and should close near the end of June 2014, TransForce said.
“This acquisition will immediately provide TransForce with a critical mass in the highly-fragmented TL sector in the United States, and we stand to benefit from Transport America's extensive geographic footprint and longstanding relationships with blue chip customers,” said Alain Bédard, TransForce chairman and CEO.
The deal came as Transport America was pursuing an initial public offering. The carrier had filed a draft registration in August 2013 and an amended statement in March. Transport America had previously been a publicly held company, but it went private in 2006.
“We had always committed to going down a dual path,” Transport America President and CEO Scott Arves told Fleet Owner. “The filing allowed us to have good conversations with other suitors."
The TransForce deal met all the goals Transport America would have achieved through an IPO, Arves said, adding the IPO’s principal objective was to create an exit strategy for Goldner Hawn at a fair price. Access to capital for growth was another major objective, and “ideally we wanted to keep the company together,” he added.
TransForce’s business model is to function basically as a holding company, allowing its carriers to operate under their existing names and management structures. “There won’t be any changes in terms of how we face the public,” Arves said. Nor does the company expect to turn over any functions to TransForce. “They don’t have a truckload presence in the U.S., and we didn’t do this deal for back-office synergies.” So Arves does not anticipate any change in Transport America’s vendor relationships.
While both the IPO and the TransForce deal achieved Transport America’s objectives, the tipping point in favor of TransForce was the certainty, Arves said. “If we had gone public on a stand-alone basis we would have been small [for a publicly traded carrier]. It would have been a difficult path for us but one we believe would have been possible.” An IPO also would have required a commitment to a multi-year strategy for obtaining capital while TransForce can provide those resources immediately as needed, Arves said.
With annual revenues of about $3 billion (U.S.), TransForce is one of the 10 largest for-hire trucking operations in North America, and acquiring Transport America adds about $350 million more in revenue.