Greenwich, CT and Ann Arbor, MI—Sept. 10, 2015—XPO Logistics, Inc. and Con-way Inc. announced that they entered into a definitive agreement for XPO Logistics to acquire Con-way. The transaction will enhance XPO's range of supply chain solutions by making XPO the second largest less-than-truckload (LTL) provider in North America and will expand the company's global contract logistics platform. XPO will also capitalize on synergies from the combination with Con-way's managed transportation, truckload and freight brokerage businesses.
Headquartered in Ann Arbor, MI, Con-way is a Fortune 500 company with 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. The transaction is expected to be substantially accretive to XPO's earnings in the first 12 months.
All of the acquired operations—Con-way Freight, Menlo Logistics, Con-way Truckload and Con-way Multimodal—will be rebranded as XPO Logistics.
XPO intends to raise its year-end 2015 target run rates for revenue and EBITDA, and issue new long-term targets upon completion of the acquisition.
Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, "Our opportunistic acquisition of Con-way will make XPO the second largest provider of less-than-truckload transportation in North America, a $35 billion market. LTL is a non-commoditized, high-value-add business that's used by nearly all of our customers. Con-way is a premier platform that we will run with a fresh set of eyes as part of our broader offering. Importantly, we'll gain strategic ownership of assets that will benefit our company and our customers during periods of tight capacity.
"Another crown jewel in this transaction is Con-way's subsidiary, Menlo Logistics, an asset-light top 30 global contract logistics provider with additional lines of business in freight brokerage and managed transportation. Menlo serves blue chip contract logistics customers in verticals such as high tech, healthcare and retail, which complement the verticals we serve at XPO."
Jacobs continued, "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."
Douglas Stotlar, president and chief executive officer of Con-way, said, "This landmark transaction provides immediate cash value for our shareholders and reflects the outstanding contributions of our employees over our 86-year history. 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."
