Heartland Express will pay $525 million to acquire truckload and other assets from TFI International, a move CEO Mike Gerdin said “basically doubled the size of our company overnight.”
The deal, announced Monday, includes Contract Freighters' "non-dedicated U.S. dry van and temperature-controlled truckload business and CFI Logistica operations in Mexico.” CFI Logistica is a subsidiary of Joplin, Missouri, headquartered Contract Freighters, Inc., known as CFI.
The purchase would propel Heartland’s truckload business to the eighth largest in the industry with an estimated $1.3 billion in revenue, according to a company presentation. The company’s truckload business was the 13th largest as of 2021, with $607 million in revenue.
"I've been after this company for a long time," Gerdin said on the call, noting he “sat on the sidelines and watched it get bought” three times from different people.
The sale excludes CFI Dedicated and CFI Logistics' U.S. brokerage operations. The deal is expected to close by Sept. 1, Heartland Chief Financial Officer Chris Strain said Monday on an investor call.
The acquisition will include around 2,000 tractors, 7,800 trailers and 2,800 employees. It "operates primarily in the US-based Conventional TL operating segment of TFI’s Truckload segment and provides comprehensive truckload service offerings, including time definite dry-van truckload, long-haul and short-haul freight transportation, reefer transportation and Mexico-based non-asset logistics services," TFI said in a press release.
Gerdin, who is also the chairman and president of Heartland, said the carrier will also pick up six facilities, bringing the company’s owned facilities total to 30.
CFI began in Joplin in 1951 with one owner-operator and two trailers, according to its website. Under the new ownership, it will continue to be headquartered there under its existing brand, management and terminal locations, according to a news release on the deal.
Montreal-based TFI noted the sale will help drive cash flow and return on invested capital.
"[By] allowing TFI to concentrate its US operations on higher-return LTL, asset-light logistics, and specialized truckload, this transaction will reduce our capital intensity, with some of the proceeds used to pay down debt in the near term and over time redeployed with the objective of generating higher returns," Alain Bédard, chairman, president and CEO of TFI, said in a press release.
Gerdin said in a news release that the carrier seeks to minimize changes experienced by drivers and customers and will work with CFI's management to "optimize the consolidated freight networks across Heartland Express, Millis Transfer, Smith Transport and CFI.”
According to Gerdin, Heartland's goal is for its consolidated adjusted operating ratio to be 85% or below within three years after the closing. Heartland anticipates repaying all debt within four years after close, Chief Financial Officer Chris Strain said Monday on an investor call.