Montreal, Quebec and Woodstock, Ontario, July 24, 2014 – TransForce Inc. (TSX: TFI, OTCQX: TFIFF), a North American leader in the transportation and logistics industry, and Contrans Group Inc. (TSX: CSS), a diverse provider of specialized transportation services, today announced that they have entered into a Support Agreement for the acquisition by TransForce, for $14.60 in cash per share, of all of the issued and outstanding Class A subordinate voting shares and Class B multiple voting shares of Contrans by way of a friendly, Board-approved take-over bid (the “Offer”). The total equity purchase price is approximately $495 million.
The Support Agreement provides that if all conditions of the Offer have been satisfied or are waived by TransForce, Contrans will declare a special dividend of $0.40 per share in respect of the recent sale of its Waste Transportation segment. Together with the $14.60 per share Offer price, the total consideration of $15.00 represents a premium of approximately 16.7% to the 52-week volume weighted average trading price of Contrans’ Class A shares on the Toronto Stock Exchange and a premium of approximately 5.1% to the volume weighted average trading price of Contrans’ Class A shares for the ten trading days ended July 24, 2014. The special dividend will be paid to Contrans shareholders of record immediately prior to TransForce taking-up and paying for tendered shares under the Offer. As a result, Contrans shareholders who tender their shares to the Offer will receive the special dividend, if paid.
The Board of Directors of Contrans, after consultation with its financial and legal advisors, has unanimously approved entering into the Support Agreement and unanimously recommends that Contrans shareholders tender their shares to the Offer. Cormark Securities Inc., the financial advisor to Contrans, has provided a fairness opinion to the effect that, as of the date of the opinion and subject to the limitations and qualifications therein, the consideration of $14.60 in cash per share to be received by Contrans shareholders is fair, from a financial point of view, to the Contrans shareholders.
All of Contrans’ directors and executive officers, holding in the aggregate 100% of Contrans’ Class B shares and approximately 14.1% of its Class A shares, have entered into “soft” lock-up agreements with TransForce, pursuant to which they have agreed to tender all of their Contrans shares to the Offer.
“I have admired the progress of Contrans for some time. Contrans has a culture similar to that of TransForce, strategically acquiring companies that add value for its shareholders. Contrans has a history of profitability, is financially sound and has seen steady growth over the years. From transportation facilities located mostly in Canada, Contrans offers customers a wide array of specialized services. This acquisition provides exciting potential for TransForce, adding strong resources, an excellent client base, and importantly, very strong management,” said Alain Bédard, Chairman, President and Chief Executive Officer of TransForce.
“TransForce has a significant market presence that will benefit our operations and possesses many of the same values that have allowed Contrans to operate successfully. I believe the entrepreneurial culture of Contrans will fit in well with TransForce. I am proud of Contrans’ management’s accomplishments over the past 25 years and look forward to seeing the team continue to flourish as part of the TransForce organization,” said Stan Dunford, Chairman and Chief Executive Officer of Contrans.
The Offer is not subject to any financing condition. TransForce has entered into a commitment letter with National Bank of Canada and Royal Bank of Canada to ensure that the required funds will be available to make full payment to complete the Contrans acquisition pursuant to the Offer.
The Support Agreement contains customary deal protection provisions in favour of TransForce for a transaction of this kind.
The Offer is expected to commence on or about August 21, 2014. TransForce will mail a take-over bid circular and related documents, and Contrans will mail a directors’ circular, to Contrans shareholders in accordance with the Support Agreement and applicable laws. The Offer will be open for acceptance for a period of not less than 35 days and will be conditional upon, among other things, there being validly deposited or tendered and not withdrawn, a number of Contrans shares that represents at least 662/3% of the outstanding Class A shares and at least 662/3% of the outstanding Class B shares, and at least a majority of the outstanding Class A shares, the votes of which would be included in any minority approval of a subsequent acquisition transaction by TransForce, pursuant to applicable securities regulations. The Offer will be subject to certain customary conditions, including receipt of relevant regulatory approvals and the absence of any material adverse changes with respect to Contrans. Once the minimum acceptance level for the Offer is achieved, TransForce intends to take steps available to it under applicable law to acquire all other outstanding shares of Contrans.
Following successful completion of the Offer, TransForce intends to nominate Stan Dunford, Chairman and Chief Executive Officer of Contrans, for election to the TransForce Board of Directors at the next annual meeting of TransForce’s shareholders, expected to be held in April 2015.
National Bank Financial Inc. is acting as financial advisor and Fasken Martineau DuMoulin LLP is acting as legal counsel to TransForce in connection with the Offer. Cormark Securities Inc. is acting as financial advisor and Cassels Brock & Blackwell LLP is acting as legal counsel to Contrans.