Quebec trucking company TFI buys U.S. company DLS for US$225-million, its eighth acquisition this year

Canadian trucking company TFI International Inc. is pushing further into the United States with the purchase of R.R. Donnelley & Sons business unit DLS Worldwide, its eighth acquisition in roughly eight months.

Montreal-based TFI said Tuesday it signed a definitive agreement to buy DLS for US£225-million, building on a string of takeover deals announced this year beginning in early March. The company has done two share offerings this year that yielded proceeds of about £600-million.

Run from Bolingbrook, Ill., DLS sells transportation logistics through a network of external third-party providers.

It has a particular focus on what's known as "less-than-truckload" transport, which means shipments that don't require a full flatbed trailer and are typically carried on pallets.

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"This acquisition allows us to get into the domestic LTL market in the U.S. without trucks, without terminals, because we use somebody else's assets," TFI chairman and chief executive Alain Bedard said in an interview. He said TFI will get its feet wet in the market and pick up experience with a view of buying an LTL trucking company later.

Mr. Bedard continues to build out TFI, which has expanded from its roots as a regional transport service to become Canada's biggest trucking company.

The transporter now has a stock market value that tops £5-billion and it controls more than 80 operating subsidiaries big and small, including names such as CanPar Express, Loomis Express and Transport America.

TFI bought three companies out of bankruptcy protection earlier this year that were controlled by the same owner. Mr. Bedard said such deals with distressed sellers are not his focus, but they represent opportunities at a difficult time for many competitors in the industry.

In Canada, TFI is among the first potential buyers a seller will call, he said.

TFI's stock price has surged 28 per cent this year to date and is up 141 per cent since its March low. The shares closed down 2 per cent Tuesday to £55.76 on the Toronto Stock Exchange.

The company has managed to weather the economic storm caused by the COVID-19 pandemic in part by preserving cash and shifting operations to do more deliveries to consumers' homes as e-commerce picks up speed. It suspended all uncommitted capital spending and furloughed almost 10 per cent of its work force this past spring, but had rehired almost half those employees as of the end of July.

Before the COVID-19 crisis, TFI's package and courier segment was heavily skewed toward higher-margin business-to-business shipments for traditional retail.

With its strategic repositioning, the company is on track to increase consumer shipments to 30 per cent of total courier volumes by the end of this year from 10 per cent before.

"We had to find a solution," Mr. Bedard said. "[Business-to-business] will never come back to pre-COVID levels because a lot of stores won't reopen."

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TFI is being selective and serving only select geographical areas that have a minimum population density, Mr. Bedard said.

He said the company has "a waiting list" of business customers it ships goods to, such as Walmart Inc., which also want TFI to deliver sold merchandise to customers.

After the DLS deal, TFI will still have available liquidity of £1.1-billion, according to an estimate by National Bank of Canada analyst Cameron Doerksen. "The company has the ability to complete additional acquisitions that we expect will materialize later this year or in early 2021," the analyst said in a note to clients Tuesday.

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