Titanium Transportation has found the “transformative” acquisition it has been looking for. The company announced this morning it has purchased International Truckload Services (ITS), a Belleville, Ont.-based truckload provider that adds 330 tractors, 1,600 trailers – and about $80 million in annual revenue – to its books.
Titanium has made no secret in recent years that it was looking to complete a major acquisition, one that would potentially double its size. While its purchase of ITS falls short of that lofty goal, it leapfrogs Titanium from the 24th largest Canadian fleet to the 12th, based on Today’s Trucking’s most recent Top 100 compilation.
About 470 employees, including owner-operators, will be added to Titanium’s growing fleet. The deal is valued at about $60.5 million and propels Titanium’s projected revenue to about $330 million this year.
‘This is a good fit’
In an exclusive interview with our group publication Today’s Trucking, Titanium CEO Ted Daniel said the deal was appealing because ITS ran the same lanes and even serviced some of the same customers as Titanium. The top eight states served by both companies were identical. Both run the Montreal-Toronto corridor. ITS came with attractive properties in Belleville and Cornwall, Ont.
“In terms of size and geography, this is a good fit,” Daniel said.
Mike McCarron, president of Left Lane Associates, represented both sides of the bargaining table, and added “ITS plays very well into Titanium’s footprint and they share a lot of the same values, a lot of the same customers.”
He said Titanium will be able to bring to ITS new technology that will ensure its future growth. It also gives Titanium more scale. McCarron first identified the potential fit four years ago. But for ITS CEO Rob Haggarty, the idea of selling was far from his mind. Then his father and company founder Max Haggarty passed away last August, and that changed things.
The toll of the pandemic
“After he passed, I thought I had another 10 years in me,” Haggarty, now 61, told Today’s Trucking. The pandemic took a toll as well. “It’s been hard. We had spoken to Titanium before and almost had a deal in 2017 and over the course of the years, I got to know Ted and Marilyn (Daniel, Titanium COO) well. After my dad passed, they were very respectful and gave me a few months to grieve and then they reached out to me.”
Left Lane Associates brokered the deal, and Haggarty credits them with getting it done. “I’m almost to the point of saying this deal probably wouldn’t have happened without those two guys,” he said of McCarron and Left Lane managing director Peter Stefanovich.
“You need the go-between because negotiations get personal. Lots of tough decisions have to take place in any deal regardless of size,” McCarron explained. “It’s similar to why hockey players need agents to negotiate contracts with a team they already play for. It takes the emotion out of the transaction.”
A smooth transition
Haggarty plans to stay on for a year to ensure a smooth transition for employees.
“I’m not a cut-and-run kinda guy,” he said. “I wouldn’t do that to the staff or to Titanium. It’s important to bring the two cultures together. We have some accounts we share and a lot we don’t. There’s a little less weight on my shoulders, but I’m still concerned about my people and educating the Titanium people on the ITS way of doing things.”
That’s exactly the type of deal Titanium likes to make. One where senior management stays on and reaps the rewards of the company’s post-acquisition success. Haggarty announced the deal to staff last night after markets closed, and publicly traded Titanium did the same. Marilyn Daniel said Titanium’s 5 p.m. conference call drew more than 300 employees, mostly drivers, who called in from wherever they were at the time.
“Our staff have become businesspeople,” she said, crediting the stock purchase plan the company offers, allowing them to financially benefit from the company’s success as it grows.
(Photo: James Menzies)
But with growth, come challenges. Such as how to maintain those close-knit relationships with employees that Titanium has prided itself on.
“We really do aim to keep it small on so many levels,” Marilyn Daniel said of the growing fleet. “And I hope going forward we are able to maintain that flavor.”
Meanwhile, Daniel said she’s excited about what Titanium can bring to its new employees. ITS’s bulging-at-the-seams Belleville headquarters will likely be expanded, she noted. And technologies in use at Titanium will be rolled out to the ITS fleet.
The Daniels are headed to Belleville this morning to meet their new team. Their message will be that Titanium is a good company to work for.
“Speak to our drivers anytime you can,” Marilyn Daniel will tell them. “Many of them come from previous acquisitions. Titanium is driver-centric and looks for good, safe drivers. This transaction offers the ability for ITS staff, drivers, and owner-operators to become shareholders and participate in the company’s share purchase plan. We are the only company in Canada to offer a share purchase plan to all staff, drivers and owner-operators.”
ITS represents Titanium’s 11th acquisition, and its largest yet, but Ted Daniel said it’s not yet finished.
“Not necessarily,” he said, when asked if it would be on the sidelines for the foreseeable future as it digests its latest purchase. “Because we are publicly traded, we are able to raise money if necessary.”
A chance to look for more
The fact Canada’s largest buyer, TFI International, has admitted the Competition Bureau is hindering its ability to make sizeable acquisitions in Canada can only help, the Daniels admit.
“It’s a great opportunity for us to be able to look for other companies in this range,” Ted Daniel said.
ITS itself has made three acquisitions over the years. Truck News documented the first of them here.
“It’s a lot easier being the buyer,” Haggarty chuckled. “For the seller, there is so much stress involved, especially for a family business that has been around for a long time. It’s a lot easier to be the buyer.”