XPO Logistics to Acquire Con-way
(Thomson Reuters ONE) -
XPO will become the second largest provider of less-than-truckload (LTL)
services in North America, and will expand its global contract logistics
platform
$3.0 billion transaction will increase XPO's revenue to $15 billion and will
nearly double EBITDA to $1.1 billion
Transaction is expected to be substantially accretive to XPO's earnings in the
first 12 months
XPO intends to increase Con-way's annual operating profit by $170 million to
$210 million over the next two years through synergies and operational
improvements
XPO will remain asset-light with net capex of 3.3% of revenue, while
significantly increasing ground transportation capacity
Conference call scheduled for Thursday, September 10, 2015, at 8:30 AM Eastern
Time
GREENWICH, Conn. and ANN ARBOR, Mich. - September 9, 2015 - XPO Logistics, Inc.
("XPO Logistics" or "XPO") (NYSE: XPO) and Con-way Inc. ("Con-way") (NYSE: CNW)
today announced that they have 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, Mich., 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.
Outlook
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.
Highlights of the Proposed Transaction
* Under the terms of the agreement, XPO will launch a tender offer for all of
Con-way's outstanding shares at a cash price of $47.60 per share. Following
the tender offer, if successful, Con-way will merge with a subsidiary of
XPO, becoming a wholly owned subsidiary of XPO, and all remaining
outstanding shares of Con-way will receive the same consideration paid to
stockholders who participated in the tender offer.
* The total transaction value is approximately $3.0 billion, including $290
million of net debt. The transaction value represents a multiple of
approximately 5.7 times Con-way's 2015 consensus EBITDA of $528 million. The
per-share cash price represents a premium of approximately 31.6 percent
compared to the closing price of Con-way common stock on September 8, 2015,
and a premium of 22.9 percent compared to the average closing price over the
trailing 90 trading days as of September 8, 2015.
* Bradley Jacobs, chairman and chief executive of XPO Logistics, will retain
these positions and lead the combined company. Douglas Stotlar, Con-way's
president and chief executive officer, will serve in a non-executive
advisory capacity during a transition period.
* The transaction is not conditioned on financing. XPO has received committed
financing from Morgan Stanley in the aggregate amount of $2.0 billion. The
company has approximately $1.2 billion in cash and an undrawn $415 million
ABL revolver, and Con-way has approximately $424 million of cash. XPO
expects to substantially increase its ABL capacity based on the addition of
receivables from the acquisitions of Norbert Dentressangle and Con-way.
* XPO will remain asset-light with net capex of 3.3% of revenue, and with
asset-based operations accounting for about a third of sales.
* The transaction is expected to close in October 2015, following the
successful completion of the tender offer and subject to the satisfaction of
customary conditions, including regulatory approvals. The boards of
directors of XPO and Con-way have unanimously approved the transaction.
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."
Compelling Rationale for the Transaction
The company will further its growth strategy with the addition of Con-way's
transportation and logistics platform:
* XPO will offer best-in-class LTL services to its 16,000 customers in North
America as the second largest LTL provider, with world-class capabilities
for reliable, time-definite service. Nearly all of XPO's current brokerage
customers require LTL transportation, and the majority of Con-way's 36,000
customers can utilize multiple XPO services.
* XPO expects to increase annual operating profit from the acquired operations
by $170 million to $210 million through cost savings and operational
improvements executed over the next two years.
* The combination will expand XPO's global contract logistics platform by 22
million square feet, to a total of 151 million square feet, and will add
160 facilities to the footprint. The acquired operations serve blue chip
customers in verticals such as high tech, healthcare and retail,
complementing XPO's expertise in aerospace, retail, telecom, agriculture,
chemicals and food and beverage.
* The combination will strengthen XPO's position in the highly desirable e-
commerce sector, which is projected to grow at a pace of 18% to 21%
annually. XPO and Con-way both have e-fulfillment contract logistics
platforms in North America and Europe.
* Between the recent acquisition of Norbert Dentressangle, and the planned
acquisition of Con-way, XPO will have significantly more ground
transportation capacity to serve customers in Europe and North America.
XPO's network of brokered, owned and contracted capacity will have lane
density covering approximately 99% of all postal codes in the United States,
as well as the regions that produce 90% of the eurozone's GDP.
* The addition of Con-way's truckload fleet, including dedicated carriage,
will increase cross-border Mexico services, which include intermodal, truck
brokerage and expedite. Cross-border growth is projected to outperform
industry growth, due to the near-shoring of manufacturing.
* The combination will grow XPO's global ground transportation network to
approximately 19,000 owned tractors and 46,000 owned trailers, 10,000 trucks
contracted through independent owner operators, and access to more than
50,000 independent carriers. In North America, XPO will have approximately
11,000 owned tractors and 33,000 owned trailers, 6,000 trucks contracted
through independent owner operators, and access to more than 38,000
independent carriers.
* XPO will share best practices between its extensive LTL networks in North
America and Europe to increase asset utilization and serve customers more
efficiently. In Europe, XPO has leading LTL positions in the United Kingdom,
France, Spain and Portugal.
* The company will have combined scale of approximately 84,000 employees at
1,469 locations in 32 countries. XPO will fully integrate all Con-way's
operations under the single global brand of XPO Logistics and will expand
the sharing of best practices throughout its organization.
$170 Million to $210 Million of New Operating Profit from Acquired Operations
XPO intends to increase annual operating profit from the acquired operations by
$170 million to $210 million through cost savings and operational improvements
executed over the next two years.
Within 12 months of closing the acquisition, the company expects to realize cost
synergies through the following actions:
* Improving purchasing and supplier management related to facility operations,
equipment, fuel, professional services, maintenance, supplies and marketing;
* Leveraging its combined technology infrastructure to reduce Con-way's annual
technology spend of $227 million, which is largely outsourced;
* Eliminating duplicative back office and public company costs; and
* Expanding its freight brokerage platform with the integration of Con-way's
$200 million brokerage business, to share capacity and data through XPO's
proprietary Freight Optimizer technology.
In the second year, the company expects additional profit improvements by:
* Reducing its $3.6 billion combined spend on purchased transportation;
* Using the larger flow of data from its combined $2.7 billion of freight
under management to identify carriers, assign loads and fill backhauls more
efficiently; and
* Utilizing its extensive intermodal network to improve LTL line-haul
efficiency.
Advisors
J.P. Morgan and Morgan Stanley are serving as financial advisors to XPO
Logistics, and Wachtell, Lipton, Rosen & Katz is acting as legal advisor.
Citigroup is serving as financial advisor to Con-way, and Sidley Austin LLP is
acting as legal advisor.
Conference Call
XPO Logistics will hold a conference call to discuss the proposed transaction on
Thursday, September 10, 2015, at 8:30 a.m. Eastern Time. Participants can call
toll-free (from U.S./Canada) 1-800-708-4539; international callers dial
+1-847-619-6396. A live webcast of the conference will be available on the
investor relations area of the company's website, www.xpo.com/investors. The
conference will be archived until October 10, 2015. To access the replay by
phone, call toll-free (from U.S./Canada) 1-888-843-7419; international callers
dial +1-630-652-3042. Use participant passcode 40691451.
About XPO Logistics, Inc.
XPO Logistics, Inc. (NYSE: XPO) is a top ten global provider of cutting-edge
supply chain solutions to the most successful companies in the world. The
company provides high-value-add services for truck brokerage and
transportation, last mile logistics, intermodal, contract logistics, ground and
air expedite, drayage, global forwarding and managed transportation. XPO serves
more than 30,000 customers with a highly integrated network of over 54,000
employees and 887 locations in 27 countries. www.xpo.com
XPO's corporate headquarters is in Greenwich, Conn., USA, and its European
headquarters is in Lyon, France. The company holds an 86.25% controlling
interest in Norbert Dentressangle SA. The remaining ND stock is traded as GND on
Euronext Paris / Euronext London - Isin FR0000052870. www.norbert-
dentressangle.com
About Con-way Inc.
Con-way Inc. (NYSE: CNW), a Fortune 500 company, provides transportation,
logistics and supply-chain management services to more than 36,000 customers in
the manufacturing, industrial and retail sectors. The company is the second
largest provider of less-than-truckload transportation and operates four
additional lines of business: contract logistics, managed transportation and
truck brokerage through its subsidiary, Menlo Logistics; and full truckload
transportation. Headquartered in Ann Arbor, Mich., Con-way has 582 locations in
18 countries, and approximately 30,000 employees. The company had $5.8 billion
of revenue for the full year 2014. www.con-way.com
ADDITIONAL INFORMATION AND WHERE TO FIND IT
The tender offer for the outstanding shares of Con-way referenced in this
document has not yet commenced. This document is for informational purposes only
and is neither an offer to purchase nor a solicitation of an offer to sell
shares, nor is it a substitute for the tender offer materials that XPO and its
subsidiary will file with the Securities and Exchange Commission ("SEC"). At the
time the tender offer is commenced, XPO and its subsidiary will file tender
offer materials on Schedule TO, and thereafter Con-way will file a
Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC with
respect to the tender offer. THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO
PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER
DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT WILL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF SHARES OF CON-WAY COMMON STOCK ARE URGED TO READ THESE
DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE (AS EACH MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME) BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
THAT HOLDERS OF SHARES OF CON-WAY COMMON STOCK SHOULD CONSIDER BEFORE MAKING ANY
DECISION REGARDING TENDERING THEIR SHARES. The Offer to Purchase, the related
Letter of Transmittal and certain other tender offer documents, as well as the
Solicitation/Recommendation Statement, will be made available to all holders of
shares of Con-way common stock at no expense to them. The tender offer materials
and the Solicitation/Recommendation Statement will be made available for free at
the SEC's website at www.sec.gov. Additional copies of the tender offer
materials may be obtained for free by contacting XPO Logistics, Inc. at Five
Greenwich Office Park, Greenwich, CT 06831, Attention: Investor Relations. In
addition to the Offer to Purchase, the related Letter of Transmittal and certain
other tender offer documents, as well as the Solicitation/Recommendation
Statement, XPO and Con-way file annual, quarterly and current reports and other
information with the SEC. You may read and copy any reports or other information
filed by XPO or Con-way at the SEC public reference room at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference room. XPO's and Con-way's filings with the
SEC are also available to the public from commercial document-retrieval services
and at the SEC's website at www.sec.gov.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including the expected closing date
for the Con-way transaction, the expected impact of the acquisition and the
related financing, including the expected impact on XPO Logistics' results of
operations and EBITDA, the expected ability to integrate operations and
technology platforms and to cross-sell services, the expected growth of e-
commerce and other sectors, the expected ability to realize cost synergies and
profit improvement opportunities with respect to Con-way, the expected ability
to retain Con-way's businesses and to grow XPO's and Con-way's businesses, and
our 2015 and 2019 revenue and EBITDA targets. All statements other than
statements of historical fact are, or may be deemed to be, forward-looking
statements. In some cases, forward-looking statements can be identified by the
use of forward-looking terms such as "anticipate," "estimate," "believe,"
"continue," "could," "intend," "may," "plan," "potential," "predict," "should,"
"will," "expect," "objective," "projection," "forecast," "goal," "guidance,"
"outlook," "effort," "target" or the negative of these terms or other comparable
terms. However, the absence of these words does not mean that the statements are
not forward-looking. These forward-looking statements are based on certain
assumptions and analyses made by us in light of our experience and our
perception of historical trends, current conditions and expected future
developments, as well as other factors we believe are appropriate in the
circumstances.
These forward-looking statements are subject to known and unknown risks,
uncertainties and assumptions that may cause actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. Factors that might cause or contribute to a material
difference include those discussed in XPO's filings with the SEC and the
following: economic conditions generally; competition; XPO's ability to find
suitable acquisition candidates and execute its acquisition strategy; the
expected impact of the Con-way acquisition and the related financing, including
the expected impact on XPO's results of operations; the ability to obtain the
requisite regulatory approvals; XPO's ability to successfully complete the
contemplated tender offer and subsequent merger; the ability to successfully
integrate and realize anticipated synergies, cost savings and profit improvement
opportunities with respect to Con-way and other acquired companies; XPO's
ability to raise debt and equity capital; XPO's ability to attract and retain
key employees to execute its growth strategy, including retention of Con-way's
key employees; litigation, including litigation related to alleged
misclassification of independent contractors; the ability to develop and
implement a suitable information technology system; the ability to maintain
positive relationships with XPO's and Con-way's networks of third-party
transportation providers; the ability to retain XPO's, Con-way's and other
acquired companies' largest customers; rail and other network changes; weather
and other service disruptions; and governmental regulation. All forward-looking
statements set forth in this press release are qualified by these cautionary
statements and there can be no assurance that the actual results or developments
anticipated will be realized or, even if substantially realized, that they will
have the expected consequences to, or effects on, XPO, Con-way or their
respective businesses or operations. Forward-looking statements set forth in
this press release speak only as of the date hereof, and neither XPO nor Con-way
undertakes any obligation to update forward-looking statements to reflect
subsequent events or circumstances, changes in expectations or the occurrence of
unanticipated events except to the extent required by law.
Contacts
For investor questions:
XPO Logistics, Inc.
Tavio Headley, 1-203-930-1602
tavio.headley(at)xpo.com
Con-way Inc.
Patrick Fossenier, 1-734-757-1557
fossenier.patrick(at)con-way.com
For media questions:
Brunswick Group for XPO Logistics
Gemma Hart, 1-212-333-3810
ghart(at)brunswickgroup.com
Joele Frank, Wilkinson Brimmer Katcher for Con-Way Inc.
Jed Repko, Aaron Palash, Mahmout Siddig
1-212-355-4449
XPO Investor Presentation Sept 2015:
http://hugin.info/155059/R/1950900/709392.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: XPO Logistics, Inc. via GlobeNewswire
[HUG#1950900]
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Datum: 09.09.2015 - 22:31 Uhr
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