Getting Bigger: What’s next for TransForce?

Alain Bedard is not a trucker whose ambition is blinded by chrome. “Trucks are a work tool,” says the president of TransForce, the ever-expanding ground transport company based in Montreal, “and I’m a businessman. I make business decisions.”

Lately, he’s made plenty.

In July, TransForce, which operates Cabano Kingsway, TST Overland, and an array of other transportation operations, finalized its purchase of Canpar Transport, the Mississauga, Ont., ground parcel carrier. In August, it agreed to buy Transport Mirald of Boucherville, Que., one of the largest truckload carriers in the province. In between those two deals, the company snapped up a small explosives hauler and a freight brokerage, both based in Quebec.

Earlier this month, the company announced plans to acquire Transport Besner and its trucking subsidiaries. Based in St. Nicolas, Que., Transport Besner specializes in domestic and transborder truckload activities in eastern Canada and the United States. Combined, the Besner group had annual revenues of approximately $43 million in 2001.

Bedard says TransForce is still shopping. “Now, 85 per cent of our activities in truckload and specialized transport are based in Quebec,” he notes. TransForce wants to increase its presence in these sectors outside the province and in Ontario, specifically.

The company’s penchant for buying stable, profitable operations — big and small — and using performance incentives to tie up the management team is catching the attention of investors. “People realize our acquisitions are well-considered, they keep their own identity, key managers remain in place, and activities are integrated,” Bedard says. “We’re seen as a major consolidator in an industry that’s too fragmented. We’re no longer seen as a Quebec-only company and now compared with major [national] corporations.”

Bedard denies that TransForce itself is a potential acquisition target. “American carriers are typically specialized in one sector. We’re mixed,” he says. “Could we sell one division? You never know, but it’s not our intention. We aren’t making the bride pretty to sell it. We want to give returns to our shareholders.”

In July, the stock jumped to a 52-week high of $9 (from $1.68 last September) on news that TransForce plans to convert itself into an income fund. TransForce said the fund would continue to operate its transportation business and that current shareholders would continue to own, through the fund, an economic interest in the business.

An income fund pays much of its available cash to unit holders. The arrangement, which will require court approval, is designed to reduce tax obligations and boost liquidity.

Earlier this year, Contrans, the publicly traded parent of Laidlaw Carriers in Woodstock, Ont., converted itself to an income fund.

Shareholders approved the proposal Sept. 12. TransForce now plans to make an initial public offering and raise about $100 million.

What will TransForce do with the money? Pay for all those acquisitions.