More than a month after XPO announced its plan to acquire Con-way for $3 billion, the logistics company has confirmed that it is a done deal, according to an XPO press release. The deal makes XPO the second largest less-than-truckload provider in North America.
According to the press release, all Con-way operations – Con-way Freight, Menlo Logistics, Con-way Truckload and Con-way Multimodal – are under XPO’s global brand. XPO CEO Bradley Jacobs will issue new financial targets during the company’s third quarter earnings release on Nov. 4.
Back in early-October, The Wall Street Journal reported that XPO would consider selling Con-way’s truckload unit. According to the Journal, three offers for Con-way’s truckload unit have been made to XPO. Jacobs has not made a decision as to whether or not sell the unit if the big transaction is successful.
Approximately $632 million in annual revenue, or around 11 percent of Con-way’s overall revenue, would be lost in the sale of the truckload unit. Because of several acquisitions over the past few years, investors have been concerned over the debt taken on by XPO.
Stocks for XPO dropped as much as 36 percent since the acquisition was announced on Sept. 9. As of noon CDT on Oct. 30, XPO stock was up nearly 5 percent to $27.24 when compared to the day’s opening price, up 20 percent from its low on Sept. 28 and down nearly 50 percent from the May 28 high of $50.56.
Closing of the deal was not met without resistance. Just 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. At the time, XPO had a rating of B1, which is considered a “high credit risk,” according to Moody’s website.
In related news, several law firms representing Con-way investors have reportedly launched an investigation into the fairness of the sale of Con-way. Con-way Director of Corporate Communication Gary Frantz had no comment.
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