XPO Logistics has agreed to acquire Con-way transportation, truckload and freight brokerage businesses for $3B, an acquisition that will make XPO the second-largest less-than-truckload provider in North America.
Con-Way, headquartered in Ann Arbor, Mich., is a Fortune 500 company with a transportation and logistics network of 582 locations and approximately 30,000 employees serving over 36,000 customers. Con-way is projected to reach $5.7 billion of revenue in 2015.
"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. LTL is a non-commoditized, 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 offering. Importantly, we'll gain strategic ownership of assets that will benefit our company and our customers during periods of tight capacity,” said Bradley Jacobs, chairman and chief executive officer of XPO Logistics.
"Another crown jewel in this transaction is Con-way's subsidiary, Menlo Logistics, an asset-light top 30 global contract logistics provider with additional lines of business in freight brokerage and managed transportation. Menlo serves blue chip contract logistics customers in verticals such as high tech, healthcare and retail, which complement the verticals we serve at XPO,” he added.
"This landmark transaction provides immediate cash value for our shareholders and reflects the outstanding contributions of our employees over our 86-year history. The combination will mean more services for our customers, more miles for our drivers, and more career opportunities for our employees as part of XPO's global organization. We look forward to working with the XPO team to complete the transaction and ensure a smooth transition,” said Douglas Stotlar, president and chief executive officer of Con-way.
XPO said the acquisition of Con-way will further its growth strategy with the addition of Con-way's transportation and logistics platform. The combined companies will offer the following:
• XPO will offer best-in-class LTL services to its 16,000 customers in North America as the second largest LTL provider, with world-class capabilities for reliable, time-definite service. Nearly all of XPO's current brokerage customers require LTL transportation, and the majority of Con-way's 36,000 customers can utilize multiple XPO services.
• XPO expects to increase annual operating profit from the acquired operations by $170 million to $210 million through cost savings and operational improvements executed over the next two years.
• The combination will expand XPO's global contract logistics platform by 22 million square feet, to a total of 151 million square feet, and will add 160 facilities to the footprint. The acquired operations serve blue chip customers in verticals such as high tech, healthcare and retail, complementing XPO's expertise in aerospace, retail, telecom, agriculture, chemicals and food and beverage.
• The combination will strengthen XPO's position in the highly desirable e-commerce sector, which is projected to grow at a pace of 18 percent to 21 percent annually. XPO and Con-way both have e-fulfillment 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 significantly 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 percent of all postal codes in the United States, as well as the regions that produce 90 percent of the Eurozone's GDP.
• The addition of Con-way's truckload fleet, including dedicated carriage, will increase cross-border Mexico services, which include intermodal, truck brokerage and expedite. Cross-border growth is projected to outperform industry growth, due to the near-shoring of manufacturing.
• The combination will grow XPO's global ground transportation network to approximately 19,000 owned tractors and 46,000 owned trailers, 10,000 trucks contracted through independent owner operators, and access to more than 50,000 independent carriers. In North America, XPO will have approximately 11,000 owned tractors and 33,000 owned trailers, 6,000 trucks contracted through independent owner operators, and access to more than 38,000 independent carriers.
• XPO will share best practices between its extensive LTL networks in North America and Europe to increase asset utilization and serve customers more efficiently. In Europe, XPO has leading LTL positions in the United Kingdom, France, Spain and Portugal.
• The company will have combined scale of approximately 84,000 employees at 1,469 locations in 32 countries. 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.