Last week, Manitoulin Transport bought the Canadian assets of Vitran Corporation and that's just what the Canadian trucking market needs, according to a CIBC World Markets report.
"There remain too many players, which has resulted in poor pricing discipline," said analyst Kevin Chiang.
Mergers of this type are a positive development in the less-than-truckload market because they improve fundamentals, he told the National Post.
Chiang also highlighted Mullen Group Ltd.'s purchase of Jay's Moving & Storage Ltd. in June and TransForce Inc.'s recent acquisitions as well as the proposed takeout of Vitran.
TransForce made a bid of US$4.50 in cash for Vitran back in September and currently holds 19.95 percent of its shares, which will now benefit them, Chiang said.
"While we had made the argument that TransForce was the natural buyer for Vitran, we would not expect it to match Manitoulin's bid," Chiang said. "If the Manitoulin/Vitran deal goes through, a consolation prize for TransForce is that it will have earned over US$4 million in gains from its Vitran investment."
The arrangement between Manitoulin and Vitran is subject to the receipt of applicable regulatory approvals (including approval under the Competition Act) and to the satisfaction of other customary closing conditions. A spokesperson for Manitouiin says the deal is a "a long ways off" from being finalized.
Commented the Interim President and CEO of Vitran William Deluce: "Together Vitran and Manitoulin Transport will become a formidable and diversified supplier for customers requiring a full suite of transportation and supply chain services in Canada and the United States."