DAILY NEWS Dec 20, 2013 7:32 PM - 0 comments

UPDATED (with reaction): TransForce ups the ante for Vitran with "superior offer"

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TORONTO, Ont. -- The bidding war for Vitran Corp. is on. Turns out, TransForce wasn’t willing to sit on the sidelines and see Vitran’s Canadian operations be acquired by Manitoulin Transport.

TransForce has offered US$6.50 per share, bettering Manitoulin’s offer of $6 per share made Dec. 9.

Vitran issued a statement this afternoon, confirming it had determined the latest offer to be a “superior proposal” to the one received from Manitoulin.

Manitoulin now has five business days to decide whether to step aside or submit a better offer. If it chooses to walk away, it will receive a $4 million termination fee from TransForce.

“If, within the response period, Manitoulin offers to amend the Manitoulin agreement such that the Board determines that the TransForce offer would cease to be a superior proposal, Vitran will be required to enter into an amendment to the Manitoulin agreement and implement the amended agreement,” Vitran said in a release. “If, within the response period, Manitoulin does not offer to amend the Manitoulin agreement, or if the proposed TransForce offer continues to be a superior proposal following a proposed amendment to the Manitoulin Agreement, Vitran intends to accept the TransForce offer, terminate the Manitoulin agreement and pay to Manitoulin Transport the agreed termination fee of US$4 million, all in accordance with the terms of the Manitoulin Agreement.”

Asked to comment on the latest development, David Newman, director of institutional equity research, transportation and industrial products with Cormark Securities, said: "Clearly, TransForce has line of sight on good synergies in terms of corporate costs, SG&A, elimination of public company costs and potential asset rationalization, as well as improved pricing."

Newman added "It could be an accretive deal for TransForce at these levels. The TransForce-Vitran combination is a good fit in terms of geography, customers and terminals, especially with Clarke, which was recently acquired by TransForce."

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