TransForce Inc. rose the most in almost six months after the transportation and logistics company agreed to buy Velocity Express to expand its package delivery business.
The transaction, which is expected to be completed by the end of the month, will add about C$160 million ($162 million) in annual revenue, Montreal-based TransForce said today in a statement. Terms of the deal weren’t disclosed.
The acquisition gives TransForce a network of more than 80 locations in the U.S. and Canada, as well as 2,600 workers and independent contractors. Revenue from TransForce’s package and courier division rose to C$867 million in the first nine months of 2012, equivalent to 37 percent of the company’s total sales.
TransForce rose 4.4 percent to C$22.05 at the close in Toronto, the stock’s biggest one-day gain since July 27.
“We view the Velocity acquisition positively as it increases TransForce’s exposure to key markets,” Benoit Poirier, an analyst at Desjardins Securities Inc. in Montreal, said in a note to clients. The deal “represents a continuation of TransForce’s strategy to solidify its position in the package and courier market.”
Poirier advises investors to buy the shares.
Velocity Express is based in Stafford, Texas.