Shares of ArcBest jumped 17% on Feb. 7 after peer carrier TFI International disclosed a 4% stake in the Arkansas-based company and its CEO said his team would like to have “some very positive discussion down the road.”
Speaking to analysts after TFI reported its fourth-quarter results, Alain Bedard said his team is looking to find value in the real estate portfolio of its TForce Freight division, much of which isn’t being used, and that he is more inclined to work with ArcBest because its workforce is, like Ontario-based TFI, unionized. And while Bedard added that TFI is looking at cost efficiencies more broadly and is also in talks with others fleets about cooperating, he also opened the door—and then didn’t categorically close it—to more than simply trading real estate with ArcBest.
“It’s just, ‘Guys, can we make things better for both companies?’ That is really the nominal goal for what we’re doing. That's the most I could say right now,” he said, later adding, “I don’t want to say more. It’s very early in this kind of process right now, right. So I think that I’ve said probably even more than I should have said on that.”
In its earnings report, the TFI team detailed that it owned a little more than 1 million shares of ArcBest as of Dec. 31, which comes out to 4.2% of the company. That stake has ballooned in value by nearly $16 million since late Feb. 6: ArcBest shares (Ticker: ARCB) popped from about $86 that afternoon to roughly $101.60 in midday trading Feb. 8, signaling that investors put a lot of stock in Bedard’s “more than I should’ve said” comment and betting that ArcBest is now in play as a takeover candidate.
A representative of ArcBest didn’t respond to a request for comment.
Bedard’s desire to explore real estate deals with ArcBest makes sense: Service center expansion has been a focus for ArcBest boss Judy McReynolds and her team of late. Speaking on their earnings call last week, McReynolds and CFO David Cobb said they are looking to invest in real estate capacity at roughly the same pace as in 2022. With about $60 million allocated to that this year, Cobb said the goal is to be ready to grow shipment counts around 5%.
“We haven’t invested in that area in a number of years and it’s great to have the cash flow and the great balance sheet that we have to position ourselves in a better way,” Cobb said.
TFI shares (Ticker: TFII) also rallied on Bedard’s comments, reinforcing the idea that investors think the company and ArcBest might make a good match. On Feb. 7, TFI climbed more than 7%; it ticked slightly higher again Feb. 8.
