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XPO Logistics to acquire Con-way

GREENWICH, CT: XPO Logistics is to acquire Ann Arbor, Michigan-based Con-way for US$3.0 billion including US$290 million in net debt.

All of the company's divisions - Con-way Freight, Menlo Logistics, Con-way Truckload and Con-way Multimodal - will be rebranded as XPO Logistics.

The transaction is expected to close in October 2015, subject to regulatory approvals and a successful completion of the stock offer. As a result, XPO said it would increase annual operating profit by up to US$210 million over the next two years from "cost savings and operational improvements".

Con-way truckCon-way - which began as an intercity trucking company in Portland, OR in 1929 - is expected to produce 2015 revenue of US$5.7 billion, an EBITDA of US$528 million, and make XPO the second largest less-than-truckload (LTL) provider in North America while simultaneously expanding its contract logistics services.

Morgan Stanley is providing US$2.0 billion in support of the planned purchase.

XPO chairman and CEO Bradley Jacobs said the purchase was an "opportunistic" positioning for his company in North America's US$35 billion less-than-truckload 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."

Jacobs said the acquisition would double XPO's pro-forma EBITDA in 2015 to US$1.1 billion and increase revenue to US$15 billion. He added: "Another crown jewel in this transaction is Con-way's subsidiary, Menlo Logistics. Menlo serves blue chip contract logistics customers in verticals such as high tech, healthcare and retail, which complement the verticals we serve at XPO."

The company said Con-way's truckload fleet would grow XPO's global ground transportation network to 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.

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