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The big just got bigger: XPO to buy Menlo parent, Con-Way
[ September 10, 2015 // Chris ]US-based XPO Logistics, recent purchaser of French-owned Norbert Dentressangle, is now buying fellow US transportation concern, Con-Way, including its Menlo Logistics forwarding and freight arm.
The latest deal will make XPO the second-largest less-than-truckload provider in North America.
Con-Way operates 582 locations and has 30,000 employees, with estimated revenues of $5.7 billion and before-tax earnings of about $528m. The total transaction is valued at around $3bn, including $290m of net debt. The combined company will employ about 84,000 people at 1,469 locations in 32 countries.
XPO Logistics chairman and chief executive officer Bradley Jacobs described Menlo as “another crown jewel in this transaction…an asset-light top 30 global contract logistics provider.” He added: “Menlo serves blue chip contract logistics customers in verticals such as high tech, healthcare and retail, which complement the verticals we serve at XPO.”
The merged company will cover virtually all the US and the regions that produce 90% of the Eurozone’s GDP. The addition of Con-Way would also boost XPO’s cross-border services between the US and Mexico.
Bradley Jacobs predicted that the Con-Way purchase would nearly double XPO’s full year earnings to $1.1bn.
With the transaction expected to be completed in October XPO would immediately begin work in a plan to improve Con-Way’s operating profit by $170m to $210m over the next few years. This would be achieved by using the combined companies’ purchasing power, using XPO’s technology infrastructure to reduce Con-Way’s, largely outsourced, $227m spending, and integrating the two freight brokerage platforms.
XPO announced that it would buy the two thirds stake in French-based forwarding and logistics operator Norbert Dentressangle from its owning family and launch a tender offer for its remaining shares on 29 April.
The deal, with a total transaction value of about €3.24 billion including €1.08 billion of net debt, has already made XPO Logistics one of the top logistics companies in the world with annual revenue (in US dollar terms) of around $8.5 billion. The purchase of Lyon-headquartered Norbert Dentressangle’s 662 locations and 42,350 employees greatly boosted XPO’s presence in Europe, including the UK where the French company had extensive operations.