XPO Logistics Sells Con-Way to TransForce for $558 Million

[kscarbel2]

Transport Topics  /  October 27, 2016

XPO Logistics has sold the Con-way Inc. truckload business to TransForce Inc. for $558 million in cash, a move that involved negotiations between two of the Top 10 companies on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

Brad Jacobs, CEO at XPO Logistics, told TT that it received offers since late last year for the smaller unit within the old Con-way Inc. but that none of the offers was attractive until Montreal’s TransForce made an unsolicited offer.

“We would’ve been happy to keep growing truckload. We weren’t looking for buyers, but TransForce approached us with an offer that worked for both sides,” Jacobs said.

When asked why make the deal now in the tepid economy, rather than wait for conditions to improve, he said the $558 million was a fair price. The CEOs of both companies called it a win-win deal.

“This acquisition significantly strengthens TransForce’s presence in the North American truckload landscape with prominent market positions in domestic U.S. and cross-border Mexico freight. The acquisition complements our existing capabilities and gives us access to a diversified and blue-chip customer base,” said TransForce CEO Alain Bédard.

“With the deal, we strengthened our balance sheet, we reduced our annual [capital expenditures] and we improved our long-term growth profile,” Jacobs added.

The Greenwich, Connecticut-based carrier will use the proceeds from the transaction to pay down $5 billion in debt.

The divested truckload operation encompasses about 3,000 tractors, 7,500 trailers and 29 locations offering dry-van services.

However, XPO stressed that it'll retain the significantly larger and profitable less-than-truckload business that it purchased from Con-way Inc. in October 2015.

“We’re 100% keeping our LTL operation, our fleet, our service center workers, our drivers,” Jacobs said.
Meanwhile, TransForce will attempt to move up from the eighth-largest truckload carrier in terms of revenue in the United States and Canada.

“We have acquired a high-quality truckload business with a rich heritage and demonstrated solid operating and financial performance. We believe we are investing into the truckload space at a critical time and are well-positioned to benefit from future growth opportunities,” Bédard said.

XPO ranks No. 3 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers. TransForce ranks No. 10.
.

[kscarbel2]

XPO Logistics divests North American truckload operation

Fleet Owner  /  October 27, 2016

Company says $558 million 'strategic sale of assets' to TransForce will reduce debt, increase return on capital, improve long-term growth

XPO Logistics, Inc. announced that it has completed the sale of its truckload business to TransForce Inc. for approximately $558 million in cash, subject to customary adjustments. XPO says it will use the proceeds from the transaction to pay down debt.

The divested truckload operation encompasses some 3,000 tractors, 7,500 trailers and 29 locations that were part of XPO's October 2015 acquisition of Con-way Inc.

XPO will continue to offer full truckload services to customers in the United States, Mexico and Canada through its brokerage network. The company points out that it is the second largest freight brokerage provider in the world.

Notably, when XPO moved to acquire Con-way, CEO Bradley Jacobs made another second-largest reference: "Our opportunistic acquisition of Con-way will make XPO the second largest provider of LTL transportation in North America, [which is] a $35 billion market," he said in a statement then.

Regarding this sale, "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," Jacobs stated. "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.

"This transaction strengthens our balance sheet and improves our long-term growth profile," Jacobs continued. "In addition to de-leveraging, the sale reduces our annual capex requirements, increases our return on capital, and lessens the cyclicality of our operations."

The divested operations, which have been reported as part of XPO's Transportation segment, were expected to generate approximately $10 million of operating income for the remaining two months of 2016, and depreciation and amortization of approximately $10 million. The company will update its financial targets to reflect the transaction when it reports its third quarter results on Wednesday, Nov. 2.

J.P. Morgan served as financial advisor to XPO Logistics and Scudder Law Firm, P.C. acted as legal advisor in this transaction, according to XPO.

[kscarbel2]

CFI Name Returns With TransForce Acquisition

Heavy Duty Trucking  /  October 28, 2016

Longtime employees of TransForce’s new acquisition in Joplin, Mo., are proudly digging out their old CFI shirts, as the company founded in 1951 as Contract Freighters Inc. goes back to its roots and its name under its new ownership.

Late Thursday, the Canadian-based trucking giant TransForce announced it had bought the former Con-way Truckload business from XPO Logistics for $558 million. It’s the third acquisition for CFI in the past decade. In 2007, CFI was purchased by Con-way and became Con-way Truckload. A little over a year ago, XPO bought Con-way. It looked into selling off the truckload operation, which didn’t fit well into its global logistics business, but decided earlier this year after looking at several offers that it would keep it.

Then TransForce, as part of its strategy to expand further into the U.S., approached XPO about an acquisition.

Katlin Owens, communications coordinator senior, told HDT that CFI will operate as a stand-alone company, and that longtime employees are thrilled.

“We have a lot of CFI employees who have been here a long time; we have an extremely long tenure for our employees,” she said. “The building is full of people who have brought out their CFI shirts from before 2007 when we were bought by Con-way.”

Owens notes that through both the Con-way and XPO acquisition, the Joplin-based operations maintained their own IT, communication, HR departments, etc. “They’re basically going to wind us up and let us go,” she says. “There’s going to be a bit of untangling, but we are in a fantastic position as far as our employee base. We’ve got the skills and experience to be successful.”

Publicly traded, TransForce operates across Canada and the United States through its various subsidiaries. With approximately $3 billion in revenue in truckload, package and courier, LTL, and logistics, TransForce has grown rapidly through a number of acquisitions. Truckload is now its largest segment, representing nearly 50% of its total revenue. CFI will be its largest truckload company in the U.S.

In a letter to customers, CFI President Tim Staroba said, “TransForce’s acquisition strategy of acquiring standalone entities that operate independently has proven to be extremely successful and we are honored to be part of the TransForce group of companies going forward.”

While being part of a global company such as XPO gave CFI employees a new global perspective, an appreciation for the world of publicly traded companies and for business measures such as EBITDA, Owens noted that CFI employees are looking forward to being able to focus more on the communities where it is located, both in its headquarters city of Joplin, as well as at terminals in Michigan, Arkansas, Texas and Mexico. (CFI has a long-established cross-border operation with Mexico and that will continue.)

“Charity is a huge part of who we are,” Owens said. Employees just raised nearly $40,000 to distribute to its local communities to make the holidays brighter for children and elderly in need, but some programs had been put on hold after the XPO acquisition.

“We have charitable programs we have put on for 20 years that were put on hiatus when XPO came. We’re going to be able to return to being more involved.”

Will CFI go full retro and bring back the old font for the logo? Too early to say, Owens said -- after all, they've only known about this for less than a day.

.