XPO Logistics, the North American-based logistics company which recently acquired European logistics giant Norbert Dentressangle, has continued its global acquisition offensive through the purchase of Con-way. Management said that the transaction would enhance XPO’s range of supply chain solutions by making XPO the second largest less-than-truckload (LTL) provider in North America, whilst also expanding the company’s global contract logistics platform through its Menlo Logistics subsidiary.
Under the terms of the agreement, XPO will launch a tender offer for all of Con-way’s outstanding shares at a cash price of $47.60 per share. The total transaction value is approximately $3.0 billion, including $290 million of net debt. The transaction value represents a multiple of approximately 5.7 times Con-way’s 2015 consensus EBITDA of $528 million.
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 officer, will serve in a non-executive advisory capacity during a transition period. All of the acquired operations – Con-way Freight, Menlo Logistics, Con-way Truckload and Con-way Multimodal – will be rebranded as XPO Logistics.
The transaction is expected to close in October 2015, following the successful completion of the tender offer and subject to the satisfaction of customary conditions, including regulatory approvals. The boards of directors of XPO and Con-way have unanimously approved the transaction.
Jacobs commented, “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 profit 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.”
Con-way has a transportation and logistics network of 582 locations and approximately 30,000 employees serving over 36,000 customers. For the full year 2015, consensus analysts’ estimates for Con-way are $5.7 billion of revenue and $528 million of adjusted EBITDA.
Ti’s Chief Executive, John Manners-Bell commented, ‘XPO has now confirmed itself in the ‘Major League’ of global logistics providers. At the beginning of the year we predicted that 2015 would see a tidal wave of acquisitions, and so it has been proved (‘Ten reasons why M&A activity in the global logistics industry is about to take off’ Logistics Briefing 8 December 2014). The industry was ripe for more consolidation as a raft of supply and demand –side trends have aligned. 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.’