Two of Canada’s biggest trucking companies, TransForce and Contrans, will be merging together as TransForce will control Contrans. Both are traded publically and now will become stronger companies with the alliance. The proposed deal was for an equity purchase price of $495 million dollars, equaling $14.60 per share. A deal is expected to be reached around August 21st sources say.
TransForce has stated that it will nominate Stan Dunford for election to its Board of Directors. Dunford is the CEO and chairman of Contrans. He was excited and confident about the merger. “TransForce has a significant market presence that will benefit our operations and possesses many of the same values that have allowed Contrans to operate successfully. I believe the entrepreneurial culture of Contrans will fit in well with TransForce. I am proud of Contrans’ management’s accomplishments over the past 25 years and look forward to seeing the team continue to flourish as part of the TransForce organization.”
We think this is a great move for both companies. If you look at the size of TransForce and Contrans, you begin to realize the type of fleet that you need to stay competitive and ahead of the field. TransForce has 3,288 straight trucks, 3,774 tractors and 12,486 trailers. That is a big fleet. Contrans has 39 straight trucks, 1,493 tractors and 2,541 trailers. This gives you a general idea of the massive size of their companies. With such a powerful and ready fleet, this is a great move for them both.
Both shareholders have a lot to benefit from the merger. I believe Contrans was maxed out. We know they didn’t want to move into the United States, they wanted to stay home and they were true to that. The deal makes sense for Contrans. When we look at TransForce, they were already the largest Candian trucking firm. The merger gives them a bigger fleet, more profit, both companies win on this deal.
If you look at the Candian trucking company in general, the deal makes sense also. The Candian trucking industry is an aged one. All the different companies are well established all over the country. You can grow organically but it would probably be at a slow rate and a cost to the company. Candian trucking firms are seeing what type of growth can be gained when you buy rather then grow. This deal is going to open the floodgates for more mergers to compete with TransForce’s ever-growing fleet.
