XPO Logistics has announced that it has completed the sale of its truckload business to TransForce for approximately US$558m in cash, subject to customary adjustments. XPO will use the proceeds from the transaction to pay down debt.
The divested truckload operation encompasses approximately 3,000 tractors, 7,500 trailers and 29 locations that were part of the company’s October 2015 acquisition of Con-way Inc. XPO Logistics states that it will continue to offer full truckload services to customers in the United States, Mexico and Canada through its brokerage network.
Bradley Jacobs, Chairman and Chief Executive Officer of XPO Logistics, said, “TransForce is getting the 19th largest asset-based truckload carrier in the U.S., a highly experienced workforce, and a presence in the cross-border Mexico freight corridor. We divested these assets to concentrate on growing our value to customers in the areas where we’re leaders in the industry: contract logistics, truck brokerage, less-than-truckload, last mile, intermodal, drayage, expedite and managed transportation.”
Jacobs continued, “This transaction strengthens our balance sheet and improves our long-term growth profile. In addition to deleveraging, the sale reduces our annual capex requirements, increases our return on capital, and lessens the cyclicality of our operations.”
The company had expected the divested operations, reported as part of XPO’s Transportation segment, to generate approximately $10m of operating income for the remaining two months of 2016, and depreciation and amortization of approximately $10m. XPO Logistics stated that it will update its financial targets to reflect the transaction when it reports its third quarter results on November 2, 2016.
Source: XPO Logistics