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.