Serial acquirer TFI International announced Friday it will buy flatbed truckload carrier Daseke in a $1.1 billion transaction. TFI also said it’s exploring spinning off its TL unit into a separate publicly traded company.
TFI (NYSE: TFII) will pay $8.30 per share for Daseke (NASDAQ: DSKE), a 69% premium to Thursday’s closing price of $4.91. The price tag values Daseke’s equity at nearly $400 million, with the remainder tied to a $658 million debt load. If completed, the deal would be executed at just under six times Daseke’s 2023 adjusted earnings before interest, taxes, depreciation and amortization forecast.
TFI plans to fund the deal with cash and debt. It said it may assume some of Daseke’s current equipment financing agreements.
The merger agreement has been unanimously approved by the boards of both companies but Daseke’s shareholders still need to approve the deal. The transaction is expected to close in the second quarter of 2024.
“This attractive acquisition is highly complementary to our existing operations and scales our Truckload segment into a leading North American truckload transportation and logistics business,” said Alain Bédard, chairman, president and CEO at TFI.
| Acquisition price | $1.1B enterprise value |
| Combined value | ~$14B enterprise value |
| Daseke annual revenue | $1.8B |
| TFI annual revneue | $7.5B |
| EPS accretion | neutral in 2024, 50 cents in 2025 |
| Recent acquisitions by TFI | more than 90 since 2014 (5 major deals including UPS Freight) |
| Financing | debt and cash |
Daseke is a rollup of flatbed TL fleets. It has executed more than 20 acquisitions since its 2009 inception. After the first acquisition, Daseke had a fleet of just 60 tractors generating $30 million in annual revenue. Today, the carrier has approximately 4,900 tractors, 11,000 trailers and 1 million square feet of warehousing space. It produced $1.8 billion in revenue last year.
Daseke will continue to operate its various brands and will report financial results through TFI’s TL unit, doubling that segment’s size, which has Bédard contemplating a spinoff.
“This acquisition also advances our strategic consideration of creating a unique opportunity for shareholders to separately invest in a specialized truckload business and in an LTL, [package and courier] and Logistics business,” Bédard said. “Our immediate focus will be on improving Daseke’s financial results, with the strategic consideration to follow and be ongoing.”
Daseke has been involved in a multiyear cost-cutting initiative designed to better integrate past acquisitions. In the decade that followed its opening, the company’s founder, Don Daseke, continued to bolt on new fleets without realizing any material cost synergies through integration. That left it with a large debt load and thin operating margins.
Don Daseke stepped down as chairman and CEO in 2019. He was bought out of his more than $100 million position in the stock a year ago.
TFI said the deal should have a neutral impact to results next year but will likely contribute 50 cents in earnings per share in 2025.
“Daseke’s deep expertise in servicing a broad portfolio of specialized and industrial end markets such as high-security cargo, agriculture, manufacturing, and construction, is critical given the relative strength of specialized market dynamics today,” Bédard said.
Earlier in the year, Bédard had planned for more than $500 million in acquisitions in 2023 with the hope of landing a larger deal in 2024.
Shares of DSKE were 65% higher at 10:54 a.m. EST Friday while shares of TFII were up 5.5%. By comparison, the S&P 500 was up 0.4%.
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