XPO Logistics To Acquire Con-way For About $3.0 Bln, Incl. Debt

(RTTNews) - XPO Logistics Inc. (XPO) said that it agreed to acquire Con-way Inc. (CNW) for about $3.0 billion, including $290 million of net debt.

The boards of directors of XPO and Con-way have unanimously approved the transaction.

As per 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. 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.

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.

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 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.

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.

Jacobs said, "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."

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.

CNW closed Wednesday trading at $35.53, down $0.65 or 1.80%. However, in after hours, the stock surged $11.74 or 33.04%.

XPO closed Wednesday trading at $33.99, down $0.83 or 2.38%. In after hours, the stock further dropped $0.79 or 2.32%.