Montreal’s TFI acquires LTL business UPS Freight
January 25, 2021
•Land Line Staff
UPS has decided to offload its less-than-truckload division, UPS Freight.
Montreal-based TFI International Inc. has agreed to purchase UPS Freight for $800 million, subject to working capital and other adjustments, according to a news release from Atlanta-based United Parcel Service.
About 90% of the acquired business will operate independently within TFI International’s LTL business segment under a new name, TForce Freight, according to a TFI International news release. UPS Freight’s dedicated truckload assets will merge into TFI’s truckload segment.
TForce Freight will continue to serve UPS’ ongoing LTL distribution needs, and UPS will continue to provide freight volumes and other services to TForce Freight after the transaction for a base term of five years.
The transaction is expected to close during the second quarter of 2021. UPS expects to recognize a noncash, pre-tax impairment charge of about $500 million on its statement of consolidated income for the year ended Dec. 31.
The transaction is subject to usual and customary closing conditions, including regulatory approvals, both company news releases said.
UPS Freight generated approximately $3 billion U.S. in revenue in 2020 and was approximately breakeven from an operating income perspective, according to a TFI news release.
UPS Freight employees will go with the business to TFI.
The agreement allows UPS to be “even more laser-focused on the core parts of our business that drive the greatest value for our customers,” Chief Executive Officer Carol Tomé said in a news release.
“We’re excited by this very attractive opportunity to extend our longstanding record of successful growth through acquisition, which will vault TFI International to one of the largest North American LTL carriers,” Alain Bédard, chairman, president and CEO of TFI International, said in a news release. “The assets acquired include a network of 197 facilities (147 of which are owned), and combined with TFI’s Canadian LTL operations, will create what we believe to be North America’s single most comprehensive LTL network, especially as we continue our expansion into Mexico, leveraging our existing LTL brokerage operations there.”
UPS Freight became part of UPS in 2005, when UPS acquired Overnite Transportation Co. (and its subsidiary Motor Cargo) from the Union Pacific Corp. for $1.25 billion. The name changed in 2006.
UPS was founded in 1907 in Seattle as American Messenger Co. It became United Parcel Service in 1919 when it expanded to Oakland, Calif. It became a public company in 1999.
TFI International manages an integrated network of more than 80 operating companies, more than 360 facilities, and more than 16,700 employees working with independent contractors, according to TFI’s website. It was founded in 1957. LL