TFI International has agreed to acquire UPS Freight for about $800 million, the Canadian trucking and logistics company and UPS (NYSE:UPS) said Monday, in a deal that will transform it into a North American less-than-truckload juggernaut.
The deal, expected to close in the second quarter, will represent TFI’s largest acquisition to date in sheer dollars, dwarfing the $558 million it spent to buy CFI from XPO in 2016. It will bring TFI a comprehensive U.S. LTL network and a dedicated truckload business, which brought in over $3 billion in revenue in 2019.
“We’re excited by this very attractive opportunity to extend our long-standing record of successful growth through acquisition, which will vault TFI International to one of the largest North American LTL carriers,” TFI CEO Alain Bedard said in a statement.
UPS Freight will operate as TForce Freight. Its 14,500 employees will shift to the new TFI unit, which will also continue serving UPS’ LTL needs under a five-year agreement. UPS Ground customers will also be able to receive freight pricing.
After the acquisition closes, U.S.-based businesses will dominate TFI’s revenue stream. The UPS Freight deal follows the acquisition of Chicago-based third-party logistics provider DLS in September.
TFI has built itself into one of North America’s largest trucking and logistics companies by acquiring companies with struggling margins — and then aggressively turning them around.
The deal also represents TFI’s single-largest turnaround project. UPS Freight is expected to post a $463 million operating loss for 2020. It posted a $75 million profit in 2019 and a $26 million loss in 2018.
Bedard has signaled TFI’s desire to get into U.S. LTL through an acquisition. He told analysts that the DLS acquisition was a way for TFI to learn the U.S. LTL market.
Over the past two years, the Montreal-based company has been building out its asset-light U.S. logistics and final-mile operations through acquisitions to set the groundwork for tapping into the growth of e-commerce. Bedard has likened the business to a “diamond in the rough.”
UPS Freight, however, represents a very different animal — with 197 facilities, 147 of which it owns. It also includes more than 6,300 tractors and 23,000 trailers.
It also comes with a workforce that is over 75% unionized.
