XPO Logistics (NYSE:XPO) Emerges as Niche Hauler via Con-Way Acquisition

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Thanks to its September 10 acquisition of Ann Arbor, Michigan-based hauler Con-Way, XPO Logistics (NYSE:XPO) has emerged as a powerhouse in the lucrative ‘less than truckload’ segment of American domestic truck transport services. XPO CEO Bradley Jacobs is no stranger to large merger and acquisition deals to put together huge companies. In the 1980s and 90s, Jacobs put together close to 500 acquisitions to build equipment rental and hauling companies. The Con-Way deal stands out because it is a huge $3 billion deal that is an all-cash acquisition. XPO is using its $1.2 billion dollar cash holdings as well as credit facilities from Morgan Stanley.

 

Con-Way will be rebranded as XPO Logistic and will greatly supplement XPOs current shipping volume. In fact, the acquisition will make XPO the second biggest player in the less-than-truckload (LTL) transport segment in the USA. LTL involves shipping different loads of freight for different customers. Each load totals to less than 20,000 pounds loaded on one truck. The materials are then unloaded to a delivery hub for dispatching. Moreover, the acquisition plugs a hole in XPO’s comprehensive trucking service portfolio which ranges from last-mile delivery, intermodal, and freight brokerage.

 

In terms of daily deliveries, Con-Way will beef up XPO’s delivery volume substantially. While XPO makes around 90,000 daily deliveries, the Con-Way acquisition will increase this daily volume to 150,000. The Con-Way deal highlights the rapid rise of XPO as a power player in the national commercial trucking industry. Considering how quickly XPO is growing, it should not surprise industry observers if this company gobbles up another smaller player in the future.

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