The new year has seen a wave of M&A activity in the transportation sector. Experts believe it may be a sample of what’s to come this year.
The freight transportation industry experienced considerable activity in the second half of 2020. This activity occurred despite the restrictions on deal-making due to the coronavirus pandemic. However, those constraints slowly easing, and new opportunities will abound in the year ahead.
There have been a total of 10 announcements of transactions in the first weeks of 2021, including some mega deals. Here’s a rundown of some of the notable deals:
Bison Transport’s sale to James Richardson & Sons, Ltd. positions Bison for continued growth and long-term success, while keeping its Manitoba roots. Bison’s ownership transitions from one Winnipeg family to another. However, this flies in the face of the recent trend of Manitoba-owned transportation companies being sold to out-of-province owners.
James Richardson & Sons acquired 100% of the issued and outstanding shares of Bison and its affiliated companies from Wescan Capital Inc., the holding company of Winnipeg’s Jessiman family.
Founded in 1969, Bison has grown to become one of the largest transportation and logistics firms firm in Canada. They have roughly 3,700 employees and contractors, operating a fleet of 2,100 tractors and 6,000 trailers across North America. Also, the company has been recognized as North America’s safest fleet for the last 15 consecutive years and consistently wins awards for management performance and corporate culture.
James Richardson & Sons is one of Canada’s largest private corporations. It dates back to 1857 and has a history in Canadian agriculture, focusing on international grain trade and agri-food. The company also has divisions in the energy, transportation and marketing, financial services, insurance, and real estate sectors.
James Richardson & Sons says that the acquisition lets the company enter the truck transportation and logistics market with a highly regarded brand, building on Bison’s 50 years of growth.
Titanium Transportation found the “transformative acquisition” it sought, landing International Truckload Services. Under the terms of the agreement Titanium acquired all the shares of ITS for considerations of approximately $60.5 million. The acquisition will include cash considerations and assumption of net debt, subject to closing adjustments.
ITS began in 1986 in Belleville, Ontario. It’s Canada's 22nd largest carrier, according to the Today's Trucking Top 100 ranking. ITS provides logistics and truckload solutions to a diverse customer base in southern Ontario, Quebec, and the U.S. The company concentrates its efforts on food products, industrial commodities and general freight.
ITS generates approximately $80 million in annualized revenue, operating over 330 power units and 1,600 trailers. They have nearly 500 employees and owner-operators.
Titanium is an asset-based transportation and logistics company servicing Canada and the United States. The company has roughly 800 power units and 3,000 trailers. Counting ITS, it has 1,100 employees and independent owner operators. Titanium provides truckload, dedicated, and cross-border trucking services, freight logistics, and warehousing and distribution to over 1,000 customers.
Titanium is a consolidator of asset-based transportation companies in Ontario. The company has completed 11 asset-based trucking acquisitions since 2011. Canadian Business has ranked the outfit as one of Canada's Fastest Growing Companies for 12 consecutive years.
Penske Logistics successfully completed its acquisition of Black Horse Carriers Inc., a privately held logistics company based in Chicago.
"We are pleased to have completed the acquisition and we now look forward to our work together as one team in the coming year," said Marc Althen, president of Penske Logistics. "We remain focused on delivering exceptional customer service as we integrate this business into our existing dedicated contract carriage operations."
Financial terms weren’t disclosed.
Black Horse Carriers opened its doors in 1925. It’s a privately held trucking company that provides services to the food and grocery, retail, bakery, dairy, consumer product goods, manufacturing, and automotive industries. Black horse has 4,000 people and operates a trucking fleet of about 2,000 vehicles. It services customers from about 90 terminals across the United States.
Late 2020 Transportation Deals Accelerate
TFI International started the onslaught in 2020. The company acquired nine firms in 2020 by the end of November. Nevertheless, analysts say the company would have bought more companies if not for the pandemic.
And at the end on November 2020, J.B. Hunt acquired Mass Movement. The delivery company that has delivered more than 2 million equipment pieces to 3,500 fitness centers since 1996.
Based in Foxborough, Massachusetts, Mass Movement has been providing logistics, delivery, assembly, and installation services for the commercial fitness industry for over two decades. Mass Movement had $29 million of revenue in 2019. The company was founded by Dom Simonetti and Jim Sullivan in 1996. Both men will become J.B. Hunt employees remain in leadership roles as the company expands its fitness equipment delivery business.
2021 Looking Good for M&A in Transportation
One expert projects a 20% increase in transaction values this year, with companies boasting more than $50 million in annual revenues realizing roughly a 10% valuation premium.
A big reason for the urgency in the past six months may be that business owners looking to leave the industry in 2020 had to put the brakes on those plans to help their companies stay afloat in the COVID-19 pandemic.
Another rationale for the M&A activity is the potential for tax reform in the new Biden administration, which may mean less revenue for sellers and for the federal government.
Also, capital remains inexpensive for buyers, motivating some first-time buyers to jump into the transportation space, such as James Richardson & Sons, the new owner of Bison Transport.
Analysts anticipate that 2021 will be an extremely successful year for transport-related mergers and acquisitions.
A phase that is hear frequently when discussing the year’s expectations is “pent-up” demand, intensified by sitting capital looking to get to work.