United Parcel Service Inc. agreed to sell its short-haul trucking business for $800 million, the first substantial move in the “better-not-bigger” strategy that Carol Tome developed since taking over as chief executive officer in June.
Canada’s TFI International Inc. will acquire the unit, one of the largest less-than-truckload carriers in the U.S., UPS said in a statement Monday. The eight-decades-old unit, separate from the package-delivery operation for which UPS is known, is primarily a business-to-business enterprise hauling large industrial cargo in big trucks.
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Tome has pledged to increase return on capital investment by focusing on the core business, brand and culture while maintaining UPS’s dividend and investment-grade credit rating. Everything else is under review, she said in a July conference call.
TFI surged 22% to C$79.23 at 9:47 a.m. in Toronto after climbing 23%, the most intraday since February 2000. The stock had advanced 45% in the 12 months through Jan. 22, while the S&P/TSX benchmark index gained 1.4%. UPS rose 1.4% to $161.17 in New York on Monday.
The freight unit had sales of about $3.1 billion and 14,500 workers last year, according to a UPS presentation. It operated 6,340 tractors and 23,400 trailers in 197 facilities.
The sale won’t affect the package-delivery business’s operations and will raise the company’s operating margin by 0.2 percentage point, UPS said.