Q: Nice acquisition today by TFII and a good move in the stock. TFII seems to have perfected the art of the acquisition and integrating into operations. I believe TFII is the largest trucking company in Canada. How do they rate compared to US firms? Is there a possibility that TFII might be in the sights of a big US firm? Could they be on the receiving end of takeover bid?
5i Research Answer:
Historically, TFII has demonstrated the playbook of growth through integrating acquisitions, while also balancing capital returns and a healthy balance sheet. We think TFII is on par with US peers in terms of execution and value creation, but the market does value some companies more favourably such as ODFL and SAIA which have consistently traded at premium multiples compared to TFII.
There is always a possibility for a takeover bid for TFII either from other carriers for industry consolidation or even a private equity bid. Having said that, we think the likelihood of such deals may be low due to TFII's size which may be a constraint on the number of potential buyers.