Vitran has agreed to sell its U.S. less-than-truckload business to an entity controlled by Matthew Moroun for $2 million, and industry watchers think the company’s Canadian business could be next.
Jason Seidl of Cowen and Co. wrote in a guidance to investors that the U.S. business is likely not the last piece to go up for sale at Vitran.
“We believe that the fact the company chose not to hold a conference call to discuss the transaction with investors could indicate that management may be interested in attempting to sell the remaining division of the company, which is the Canadian LTL business,” he wrote. “We believe this business makes for a fairly attractive acquisition opportunity as it is a niche asset-light LTL operation, which is solidly profitable.”
Seidl predicted if the Canadian business would be sold, Vitran could find a buyer at a purchase price of somewhere between $5 and $5.50 per share. Stifel Nicolaus puts the value of the Canadian entity at between $84 million and $108 million before taking into account its net debt of $28 million; that price would put the per-share value at somewhere between $3.40 and $4.90.
“Assuming the sale of the company's beleaguered U.S. operation comes to bear,” Stifel wrote in a note to investors, “we believe that a sale of Vitran's remaining, asset-light, better-performing Canadian business is now more likely, and we view it as an attractive target for a number of strategic suitors.”
Vitran’s U.S. sale is scheduled to close by the first week of October. Though the two parties have agreed to the sale, there is no guarantee that the transaction will be completed, officials said.
According to William Deluce, the sale of Vitran’s U.S. holdings will allow the company to focus on its Canadian business. In a press release, he gave the impression the company will concentrate on the profitability of its Canadian LTL holdings moving forward, and he did not mention the prospect of another sale.
"Over the last 25 years, Tony Trichilo and his team have built one of Canada's premier providers of LTL services,” Deluce said in a statement. “This model has resulted in consistent profitability and cash flow generation. With this transaction, we are now excited to be solely focused on the Canadian business, which currently has cash of approximately $22 million."