TFI International Inc. plans to buy flatbed and specialty carrier Daseke Inc., a move that will build its truckload segment’s revenue to $3.6 billion annually and set it up to benefit from what Chairman, President and CEO Alain Bédard calls “the relative strength of specialized market dynamics today.”
Montreal-based TFI, No. 9 on the 2023 FleetOwner 500 list of top for-hire carriers, will pay $386 million in cash for Daseke’s common stock. Taking into account the preferred shares and debt of Daseke (No. 26 on the FO 500) as well as deal costs, the purchase has a total estimated value of about $1.1 billion. It is expected to be completed next spring, and Daseke’s operations are forecast to begin contributing to TFI’s net profits in 2025.
“This attractive acquisition is highly complementary to our existing operations and scales our Truckload segment into a leading North American truckload transportation and logistics business,” Bédard said in a statement. “Our immediate focus will be on improving Daseke’s financial results, with the strategic consideration to follow and be ongoing.”
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That “strategic consideration” could have TFI split its divisions into a truckload business and a venture grouping its less-than-truckload, package/courier, and logistics segments. Such a decision, the TFI team, said will be made in the “medium term.”
Addison, Texas-based Daseke is on pace to book about $1.6 billion in revenue this year, in line with 2022’s numbers. CEO Jonathan Shepko and his team—who work with clients in mining, manufacturing, construction, and other industries, often on “challenging” projects—have been focused on improving profitability and paying off debt in recent quarters after Daseke’s average rate began fell sharply from mid-2022 to early this year.
This fall, they said an ongoing efficiency and integration program was on pace to add $30 million to EBITDA on an annual basis by the end of 2024. An expected improvement in the broader freight market should help with that.
“We do believe in the adage, ‘The cure for low prices is low prices’, and this cycle will eventually correct in a meaningful way, even without an external catalyst,” Shepko said in early November. “We will likely not be beneficiaries of this recovery until 2024.”
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Daseke has more than 4,000 customers and operates about 4,900 tractors and 11,000 flatbed and specialized trailers as well as roughly 1 million square feet of warehouse space across North America. TFI leaders said Daseke’s stable of brands, which include Lone Star Transportation and Boyd Bros. Transportation, will be maintained under the TFI umbrella.
TFI executives have been active in the M&A market this year: Year to date, they have spent about $100 million on 11 smaller purchases, and they recently raised $500 million through a private placement of debt. Via its TForce subsidiary, the company also this month won the auction for two Yellow Corp. terminals in California and Kentucky with bids totaling nearly $16 million.
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It seems reasonable to expect more than just the Daseke deal next year. On his team’s third-quarter earnings conference call in October, Bédard said that debt sale gave TFI “a little bit more dry powder for us to be in a position to do the good things that we want to do into ’24 [...] Our pipeline is really strong in terms of M&A.”
