XPO, Con-way deal faces a roadblock with credit rating review

By Tyson Fisher, Land Line staff writer | Tuesday, September 22, 2015

XPO Logistics’ plan to acquire Con-way for $3 billion may not be a sure thing. One day after news of the deal broke, Moody’s Investors Service announced that XPO’s ratings would be under review for a possible downgrade. XPO has a current rating of B1, which is considered a “high credit risk,” according to Moody’s website.

Moody’s announcement was a direct response to XPO’s plans to acquire Con-way, which would be the second multibillion-dollar acquisition for XPO this year. Back in April, XPO bought Norbert Dentressangle, a European transport and logistics company, for $3.5 billion.

Moody’s review questions XPO’s ability to integrate both Con-way and Norbert Dentressangle without burying itself in excessive debt. Currently, four classes of ratings are under review, all of which are already at a high-risk B1 rating. XPO’s outlook, currently ranked as “stable,” will also be under review.

A document dated Sept. 17 on Moody’s website suggests that XPO’s plan to acquire Con-way is “credit negative.” A similar document dated April 28 declared the same “credit negative” status for the Norbert Dentressangle acquisition. XPO announced plans to purchase Norbert on April 27 and officially completed the deal on June 8, according to XPO’s website.

Relatively new to the game, XPO Logistics began in 1989 as Express-1 Expedited Solutions and was purchased by Segmentz in 2004. XPO completed its first acquisition in 2008 with Concert Group Logistics for $9 million in cash and the issuance of 4.8 million shares of XPO stock. Since then, XPO has acquired nearly 20 companies, with six of those in 2013 alone.

According to the New York Stock Exchange, XPO’s stock has been steadily increasing since 2010. XPO stock reached its peak in May at $50.56 a share. Since then, the price has plummeted more than 40 percent. At press time, XPO stock was priced at $29.21, nearly 6 percent lower than the opening price for the day.

See related: http://www.landlinemag.com/Story.aspx?StoryID=29763 

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