XPO Logistics has made headlines again with yet another multi-billion dollar acquisition with its recent announcement it had agreed to buy US trucking and logistics company Con-way in a deal that values publicly-listed Con-way at $3 billion. Th e deal is expected to close at the end of October and comes on the heals of XPO’s recent acquisition of French haulage and logistics company Norbert Dentressangle.
Acquiring Con-way’s large less-thentruckload (LTL) business will make XPO the second-largest LTL provider in North America, after FedEx Freight. Th e acquisition also brings XPO Con-Way’s Menlo Logistics division, which Bradley Jacobs, chairman and chief executive of XPO Logistics described as “another crown jewel in this transaction”.
Menlo, an asset-light top-30 global contract logistics provider with additional lines of business in freight brokerage and managed transportation, serves blue-chip contract logistics customers in verticals such as hi-tech, healthcare and retail, which complements the verticals XPO serves – including aerospace, retail, telecom, agriculture, chemicals and food and beverage.
XPO also also gains additional Asia focus courtesy of Menlo, although Menlo’s presence in Asia is still relatively small but it will never-the-less permit XPO to call itself a truly global contract logistics provider. Menlo’s Asia presence is primarily in China and India, but also Hong Kong, Taiwan, Th ailand, Malaysia, Singapore and Australia. All of the acquired operations – Con-way Freight, Menlo Logistics, Con-way Truckload and Con-way Multimodal – will be rebranded as XPO Logistics.
Th e Con-way transaction is forecast to nearly double XPO’s pro-forma fullyear EBITDA to around $1.1 billion and increase revenues to $15 billion. Jacobs continued, “The Con-way transaction will nearly double our pro-forma full year EBITDA to approximately $1.1 billion and increase our revenue to $15 billion upon closing. “We’ll immediately begin executing our plan to improve the operating profi t of the acquired operations by $170 million to $210 million over the next two years. We’ll raise our year-end 2015 target run rates for revenue and EBITDA, and issue new long-term targets, when we close,” Jacobs added.
Bradley Jacobs, chairman and chief executive of XPO Logistics, will retain these positions and lead the combined company. Douglas Stotlar, Con-way’s president and chief executive offi cer, will serve in a limited role as an independent advisor to the combined company through the fi rst quarter of 2016.
“Our opportunistic acquisition of Con-way will make XPO the second largest provider of less-than-truckload transportation in North America, a $35 billion market,” Jacobs said. “LTL is a noncommoditised, high-value-add business that’s used by nearly all of our customers.
Con-way is a premier platform that we will run with a fresh set of eyes as part of our broader off ering. Importantly, we’ll gain strategic ownership of assets that will benefi t our company and our customers during periods of tight capacity.
XPOI said the combination will also strengthen its position in the highly desirable e-commerce sector, which is projected to grow at a pace of 18 to 21 per cent annually. XPO and Con-way both have e-fulfi llment contract logistics platforms in North America and Europe.
Between the recent acquisition of Norbert Dentressangle, and the planned acquisition of Con-way, XPO will have signifi cantly more ground transportation capacity to serve customers in Europe and North America. XPO’s network of brokered, owned and contracted capacity will have lane density covering approximately 99 per cent of all postal codes in the US, as well as the regions that produce 90 per cent of the eurozone’s GDP.
