XPO Logistics to buy trucking and logistics company Con-way in $3 bn deal

US transportation and logistics services company XPO Logistics Inc, yesterday struck a deal to buy Con-way Inc for $3 billion, including debt, in order to create one of the largest freight transportation and logistics providers in the US.

Under the deal, XPO has offered to pay $47.60 per Con-way share in cash, a premium of nearly 34 per cent to Con-way's closing price on Wednesday.

XPO said that the transaction is not conditional to financing and it has received committed financing from Morgan Stanley of $2 billion.

The company has approximately $1.2 billion in cash and an undrawn $415 million ABL revolver, while Con-way has approximately $424 million of cash.

Con-way, 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 Michigan-based company is the second-largest provider of less-than-truckload transportation and also operates contract logistics, managed transportation and truck brokerage through its subsidiary, Menlo Logistics; and full truckload transportation.

It operates at 582 locations in 18 countries, and employs around 30,000 people. The company had $5.8 billion of revenue last year.

For the full year 2015, analysts' estimates revenue for Con-way to be $5.7 billion and $528 million of adjusted EBITDA.

All of the acquired operations - Con-way Freight, Menlo Logistics, Con-way Truckload and Con-way Multimodal - will be rebranded as XPO Logistics.

Bradley Jacobs, chairman and CEO 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.

Douglas Stotlar, president and CEO of Con-way, 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."

With more than 37,000 deliveries a day, XPO is one of the fastest-growing providers of transportation logistics services in North America. It is the second-largest freight brokerage firm, the third-largest provider of inter-modal services, the largest-provider of last mile logistics for heavy goods, and the largest manager of expedited shipments.