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Appetite for Acquisitions: Find the Synergies

Posted: August 1, 2014

TORONTO — For our upcoming Economic Outlook story, we chatted with, among other experts, Walter Spracklin, managing director with RBC Capital Markets’ Transportation Sector.

Spracklin focuses on the publicly traded trucking companies, so TransForce, Contrans, TriMac and Mullen, keeping an eye on the general industry factors that are going to affect their businesses.

One of the questions we asked was how the acquisition environment was developing for 2013, and Spracklin said that he’s seeing acquisition opportunities for all the trucking companies that they cover.

“I think that those opportunities are going to present themselves more favorably now because expectations on the seller side will have dialed down a bit and the balance sheets on the part of buyer’s side are in pretty good shape. All of the trucking companies have indicated some level of appetite for acquisitions, and in some cases it has been a very healthy appetite for acquisitions.”

He says that in an environment when the economy is choppy and people are suffering a little bit, “sometimes those opportunities present themselves in ways that are a little bit more conducive than when everything is going great and acquisitions are sometimes tougher to find.”

Basically, 2013 could be a good time for some synergies.

Meyers Transportation Services, specializing in LTL, truckload and logistics, recently purchased a 80,000 sq/ft. facility located in Cheektowaga, NY., because, explains Meyers president Jacquie Meyers, the synergies were great.

“Our strategic vision for the last two years has been growth,” she explains, “either with other services we’re offering or territories we’re covering and this was just a perfect fit for us. We had a small warehouse down in Buffalo and we also have MLS, which is a small trucking company that crosses the border out of St. Catherines. When we saw this it almost fell into laps; we can consolidate with our small warehouse and we can consolidate with the trucking company.

“We’ve had some opportunities that were too big to swallow, too much of a risk; this was the perfect size for us too. And the expertise, too. We took most of the employees and the manager who had been running it for the last ten years. They know the business, they know the customers.”

Spracklin also shared insight as to what moves the big guys could be making in 2013:

TransForce: “Has been the main acquirer in last few years, made some large acquisitions in the last year or two, have been digesting those in 2012, and will continue to do that in 2013. But we will probably see a little more activity on the acquisition front from them.”

Contrans: “Has been a steady acquirer as well, not as aggressively [as TransForce], but will be looking for modest, sort of tuck-in acquisitions to build its book of business.”

Trimac: “Has signaled to be a lot more active on the acquisition front so we expect them to be certainly stepping up.”

Mullen: “Has got a very strong market share in the oil patch in Alberta and is clearly a number one player there. Acquisition opportunities are a little bit harder to come by given their scale in that sector. I think what they are going to be faced with is do we start to grow outside of Canada if want to stay in the oil and gas sector, maybe move into some of the U.S. plays like the Balkans or they move out into Canada, but outside of the oil patch. They do already have operations in general trucking but mostly western Canada. So do they start to spread their wings a little bit more and get more involved in trucking outside of the western areas is one question that I think is a possibility.”

For more insight into 2013, look for our comprehensive Economic Outlook 2013 story in the December issue of Today’s Trucking.

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