In a move that led to many stockbrokers scurrying late Wednesday afternoon, XPO Logistics officially announced that it plans to acquire Con-way for $3 billion. All of Con-way’s operations – Con-way Freight, Menlo Logistics, Con-way Truckload and Con-way Multimodal – would be acquired and rebranded as XPO Logistics.
The acquisition would make XPO the second-largest less-than-truckload provider in North America.
The deal equates to $47.60 per share for Con-way. At the close of the New York Stock Exchange on Sept. 9, Con-way shares were priced at $35.53. At noon (CDT) on Sept. 10, stock value increased by 33.75 percent to $47.53. Conversely, XPO stocks fell 13.45 percent to $29.43 in the same time frame.
According to Con-way’s website, experienced drivers can earn anywhere between $0.38 and $0.44 per mile based on how many miles a driver has under his or her belt. On Thursday, an XPO spokesperson declined to comment on what the acquisition would do to driver pay rates, but CEO Bradley Jacobs told Bloomberg that drivers were “very important” and XPO intended to keep all the drivers.
According to a press release, Douglas Stotlar, Con-way’s president and chief executive officer, will serve in a non-executive advisory capacity during a transition period. Con-way’s management will not be part of the joint company.
XPO expects the acquisition to begin positively affecting earnings per share within the first 12 months. This will be made possible by XPO’s expectation of increasing annual operating profit of Con-way from $40 million to $210 million over the next two years via cost savings and operational improvements.
Fortune 500 company Con-way currently has 582 locations, approximately 30,000 employees, and more than 36,000 customers. In 2015, Con-way reached revenue of $5.7 billion and earned $528 million earnings before interest, taxes, depreciation, and amortization.
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