Nearly one year to the day after XPO Logistics officially acquired Con-way, the company has announced it has completed the sale of its truckload business to TransForce for $558 million in cash, according to an XPO press release.
Truckload operations acquired through the Con-way deal on Oct. 30, 2015, include approximately 3,000 tractors, 7,500 trailers and 29 locations. Using its position as the second largest brokerage network, XPO will continue to offer truckload services in North America.
Back in early October last year, The Wall Street Journal reported that XPO would consider selling Con-way’s truckload unit. According to the newspaper, three offers for Con-way’s truckload unit were made to XPO. XPO CEO Bradley Jacobs had not made a decision as to whether or not sell the unit at the time.
Approximately $632 million in annual revenue, or around 11 percent of Con-way’s overall revenue, would have been lost in the sale of the truckload unit during the acquisition last year. Before the deal was made official, XPO expected to increase annual operating profit of Con-way from $40 million to $210 million over the next two years via cost savings and operational improvements.
XPO will put the profits from the TransForce deal toward the debt the company has accrued after acquiring several companies. In April 2015, XPO bought Norbert Dentressangle, a European transport and logistics company, for $3.5 billion.
In September 2015, XPO faced opposition toward the $3 billion Con-way acquisition. Just one day after XPO announced plans to acquire Con-way, Moody’s Investors Service announced that XPO’s ratings would be under review for a possible downgrade. XPO had a rating of B1 at the time, which is considered a “high credit risk.”
Moody’s review questioned XPO’s ability to integrate both Con-way and Norbert Dentressangle without burying itself in excessive debt. A document dated Sept. 17, 2015, on Moody’s website suggested that XPO’s plan to acquire Con-way is “credit negative.” A similar document dated April 28, 2015, declared the same “credit negative” status for the Norbert Dentressangle acquisition.
In January, XPO cut approximately 190 jobs as part of its previously announced synergy plans in its less-than-truckload acquisition from Con-way. Approximately one week later, the logistics company shut down seven terminals.
In May, XPO employees in the U.S. and Europe were upset about anti-worker actions and abuses, according to a Teamsters news release. Union leaders were claiming XPO was “mismanaging the integration of its new businesses, leading to operational and financial risks.”
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