XPO Logistics to Acquire Con-Way

XPO Logistics has a 52-week low of $28.91 and a 52-week high of $50.96.

Con-way’s operations, which serve blue-chip customers, like high tech, healthcare, and logistics, complements XPO Logistics’ own expertise in aerospace, retail, telecom, agriculture, chemicals and food and beverage. The company earned $1.22 billion during the quarter, compared to analyst estimates of $1.08 billion. XPO will run Con-way with “a fresh set of eyes as part of our broader offering”. On the date of report, the stock closed at $38.64.

Con-way-the Less-Than-Truckload (LTL) service provider-was valued at $3 billion.

Bradley Jacobs, chairman and chief executive of XPO Logistics, will lead the combined company. The Transport section consists of expedited transportation, intermodal, last mile, its truck brokerage and freight forwarding companies.

With this, XPO will launch an offer for Con-Way’s shares at $47.60 per share, representing a 32 percent premium of its closing price on Tuesday. Douglas Stotlar, Con-way’s president and CEO, will serve in a limited role as an independent advisor to the combined company through the first quarter of 2016. XPO will fully integrate all Con-way’s operations under the single global brand of XPO Logistics and will expand the sharing of best practices throughout its organization. The deal is expected to close in October. And, despite Con-way’s asset-heavy structure, XPO will remain asset-light as they will only account for a third of the company’s revenue.

Furthermore, Ms. Landry was skeptical regarding the way XPO’s balance sheet would look following the completion of the acquisition. “We don’t expect this will be the last major acquisition this year, as logistics providers based in Asia, Europe and North America seek to fulfil their global ambitions”. Express-1, Inc. (Express-1) provides time-critical expedited transportation to its customers, through carrier arrangements that assign one truck to a load, with a specified delivery time requirement. During the year ended December 31, 2012, Con-way Freight’s average weight per shipment was 1,326 pounds.

Jacobs said the “crown jewel” of the deal is the acquisition of Con-way subsidiary Menlo Logistics, which he tried to acquire a year ago but the deal fell through due to technicalities in tax law. The California-based fund Orbis Investment Management (U.S.) Llc revealed it had purchased a stake worth about 4.37% of the investment manager’s stock portfolio in XPO Logistics.

Oppenheimer analyst, Scott Schneeberger, stated in an investor note today that the bank believed the acquisition to be positive for XPO, with the company’s increased footprint in Mexico.

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