Dive Brief:
- TFI International will acquire DLS Worldwide, a business unit of R.R. Donnelley & Sons, for $225 million, according to a Tuesday news release from the Montreal-based carrier.
- DLS, based in Bolingbrook, Illinois, (outside of Chicago) focuses on LTL, TL, freight forwarding, expedited service, parcel delivery and intermodal, according to TFI. Its shippers focus on manufacturing, retail and wholesale consumer products, technology and print or mail products. In the next four quarters, TFI expects the DLS acquisition to generate $22.5 million in operating income.
- TFI's acquisition continues its 12-year buying streak, scooping up about 80 North American companies. In August, TFI acquired Keith Hall & Sons Transport, an Ontario-based carrier of milk, liquids, dry foods and freight, and Apps Transport Group, another Ontario-based carrier that provides LTL, TL, warehousing and distribution in Canada.
Dive Insight:
The Canadians are coming. And it's bigger than just TFI, the largest Canadian carrier and the 11th largest North American carrier.
Canadian carriers have been eyeing the U.S. transport market for the last few years. The COVID-19 pandemic slowed M&A activity, with volume and value of deals declining in the first half of 2020, according to PwC. But TFI's deal-making shows M&A from the north is picking back up.
With Keith Hall & Sons, TFI picked up an Ontario carrier that also does business in the United States. Other recent acquisitions have been located in the American heartland.
Comcar provided opportunities for TFI to expand into the United States. This month, TFI closed on CCC Transportation, a TL carrier in Auburndale, Florida, and a former part of Comcar Industries, which filed for Chapter 11 bankruptcy.
In June, TFI acquired MCT Transportation, formerly Midwest Coast Transport, of Sioux Falls, South Dakota, for $9.6 million. MCT Transportation was a refrigerated and dry van subsidiary of Comcar. At the same time, TFI bought another Comcar subsidiary, CT Transportation, a flatbed company located in Savannah, Georgia, for $15 million.
TFI has Canadian rivals for American businesses. One is Manitoulin Global Forwarding, which bought N/J International of Houston in November 2018. It was, at the time, Manitoulin's first in a planned series of acquisitions south of the border. It bought Demark Global Logistics of Miami in October 2019.
To one analyst, it's not surprising Canadian companies look south for opportunities.
"Most Canadian companies that have strong balance sheets and got some cash, they want to expand in the United States, because the U.S. economy is 12 times bigger," said Nikhil Sathe, managing director of Logisyn Advisors. "California GDP is more than Canadian GDP ... The Canadian population is less than the state of Texas. The growth opportunities are more south of the border."
Sathe said 36,000 heavy-duty trucks cross the U.S.-Canadian border every day, traveling to cities and warehouses. But for Canadian companies flush with capital, opportunities in America are hard to resist.
"It's a tremendous market," said Sathe. "I think it's logical that if you have the money and the capital, you will expand in the United States."
