Con-way has been acquired in a multi-billion dollar deal and the company will rebrand as XPO Logistics. XPO is set to acquire Con-way Inc., one of the country’s largest trucking companies, stated by XPO on Wednesday September 9th. XPO and Con-way have been in talks for years, but a deal was never reached due to tax issues,
The $3 billion deal has been agreed to under terms that XPO will launch a tender offer for all of Con-way’s outstanding shares at a cash price of $47.60 per share. The deal is expected to close sometime in August, while Con-way will then be merged with another XPO subsidiary.
In the 2015 CCJ Top 250, Con-way ranked as the country’s sixth largest carrier, while XPO ranked as the country’s 12th. The acquisition will make XPO the second largest less-than-truckload carrier in North America, the company says.
The acquisition follows XPO’s $3.5 billion purchase of French trucker Norbert Dentressangle SA in June, XPO’s annual revenue is now expected to climb to $15 billion, more than six times the $2.4 billion revenue the company reported in 2014.
The deal also gives XPO Logistics a direct spot into the trucking business in the U.S. for the first time ever, marking the company’s transformation from a company that primarily operated as a middleman between shippers and carriers into a firm that generates an estimated 33 percent of its revenue from its own truck fleet and other assets.
Con-way has 582 locations and roughly 30,000 employees. The company hit $5.8 billion in revenue in 2014. It has nearly 12,000 power units and nearly 17,000 drivers.
President and CEO of Con-way Douglas Stotlar said shareholders, customers, drivers and employees will benefit from the acquisition.
“This landmark transaction provides immediate cash value for our shareholders and reflects the outstanding contributions of our employees over our 86-year history,” Stotlar said. “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.”
XPO Chief Executive Bradley Jacobs said by operating its own fleet, XPO can chase bigger contracts with shippers, many of which prefer to work directly with carriers. “By having at least a minority component of assets in the business mix, we…get a bigger seat at the table with customers,” Mr. Jacobs said, adding that amassing trucks and other physical assets is “not our base plan.”
XPO Logistics is one step closer to hitting their target yearly annual revenue of $23 million by 2019. In fact, the company has had more than a dozen acquisitions since 2011. For the time being, XPO is thought to be done with major acquisitions, but has yet to rule out the purchasing of smaller companies.
Con-way has struggled in 2015, the company has been under-performing all year. The Con-way stock is down 28 percent in 2015. The company’s second quarter was below estimates and many felt that is was the right time to move on the deal. The current stock price for Con-way is at $47.44 a share, down 0.21 percent on Friday.