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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Jon
As a former employee of one of the Daseke subsidiaries that routinely dealt with Daseke Corporate and Leadership, only time will tell how this plays out for the remaining Daseke subsidiaries after the One Daseke model, but TFI’s model appears to mirror the original Daseke model, TFI has just executed it better it would seem which I have a feeling is going to be in the best interest of the subsidiary employees and drivers long-term, whereas Daseke corporate employees may be on their ways out the door over the next year once the transaction is finalized in Q2 2024.
The biggest case that I can make for why I think this will be positive for the subsidiaries is the number of historical acquisitions by TFI and their number of active subsidiaries compared to Daseke, along with the tenure of the leadership team. I may have my numbers wrong here, but I believe the numbers are 115:90 for TFI and 24:9 for Daseke, in that of TFI’s acquired subsidiaries purchased 75% still remain compared to 40% for Daseke. TFI’s model, at least as publicly communicated, is to buy companies with upside, keep management in place where strong, and give them the resources and guidance to be successful. Daseke’s original model mirrored that, somewhat, whereas it was more so hands-off until the wheels came off, bad investments became apart in the financials, and multi-year cost cutting has occurred and ultimately ended with the sale of Daseke.
As for their leadership, executive, and operating team, TFI’s average tenure and applicable experience per review of their website blows Daseke out of the water. Their CEO has been with the entity since 1996, CFO since 2016, and various levels of leadership heavily weighted as being with the company in a years’ band of 1998-2014, so nearing a minimum of 10-years of tenure. A review of LinkedIn for Daseke shows that it’s been a revolving door for at least 5 years, the C-suite roles all turned over 2 or 3 times in that period, entire departments (finance, safety, HR) turned over, tenure with Daseke is less than 3 years on average, and most Daseke employees don’t have flatbed, specialized, or open-deck experience, let alone transportation in their background.
Sam
I worked for 2 of the companies under the daske umbrella, before daske bought them. Both where better before
John
My name is John I am a four axle heavy haul for Lonstar transportation we haul wind energy, and among other oversize specialized equipment I had a filling daseke was buying all these companies sooner they were going to sell out. That’s what they’re in the business for is making money, but what goes up must come down that’s what I’m afraid of. and I can speak for myself. I enjoy this company the way it is and the pay is great so far.