MONTREAL – TransForce Inc. is expanding its reach in the United States after Canada’s largest trucking firm acquired the North American truckload operations of XPO Logistics for US$558 million in cash.
The Montreal-based transportation company announced Thursday that the purchase will make TransForce (TSX:TFI) a leading player in the U.S. truckload sector.
The XPO (NYSE:XPO) division, based in Missouri, is the 19th-largest American carrier and a leading provider of cross-border trucking services into Mexico.
“The acquisition complements our existing capabilities and gives us access to a diversified and blue-chip customer base,” TransForce chairman and CEO Alain Bedard said in a news release.
TransForce has long searched for an acquisition that would accelerate its trucking presence in the United States to complement its large scale in Canada. In 2014, it purchased Ontario-based trucking firm Contrans for $495 million.
XPO, which claims to be the second largest freight brokerage provider in the world, said in a news release that it will continue to offer full truckload services to customers in the U.S., Mexico and Canada through its brokerage network.
TransForce sold its waste management business last February to Toronto-based GFL Environmental Inc. for $800 million. It planned to use the money to pay down debt and for targeted acquisitions.
Bedard said the XPO transaction positions the company to benefit from future growth opportunities.
XPO’s network includes 29 locations across the U.S. with about 3,000 tractors and 7,500 trailers.
The acquired business is expected to generate about US$530 million in annual revenues and boost TransForce’s U.S. revenues to about US$850 million.
The deal is being financed by TransForce’s existing credit facilities and a new C$500-million loan that has been underwritten by National Bank of Canada and the Royal Bank of Canada.
TransForce is a leading North American transportation and logistics firm with about $4 billion in annual revenues that offers packaging and courier services along with large and smaller trucking delivery vehicles.
Note to readers: This is a corrected story. A previous version had headlines that said the US$558-million deal was for XPO, when in fact, it was for XPO’s trucking assets.