XPO logistics enters 3PL big league with $3bn con-way buy

posted on 4th April 2018

XPO Logistics is to buy US transport and logistics giant Con-way for US$3 billion in the latest of a series of ambitious acquisitions by the US firm, which this summer completed the $3.5 billion purchase of Europe’s Norbert Dentressangle.

The “opportunistic” transaction is expected to increase XPO’s annual revenues to $15 billion and will nearly double its EBITDA to $1.1 billion, making XPO the second largest less-than-truckload (LTL) provider in North America and the world’s second-largest global contract logistics provider.

XPO described Con-way’s 3PL subsidiary, Menlo Logistics, as “another crown jewel in this transaction: an asset-light top 30 global contract logistics provider with additional lines of business in freight brokerage and managed transportation. Menlo serves ‘blue chip’ contract logistics customers in verticals such as high tech, healthcare and retail, which complement the verticals we serve at XPO.”

Menlo generated revenues of $1.64 billion in 2014, and although the division’s primary market is the US, it also operates facilities in Europe (the UK, Ireland, Netherlands, Belgium, Germany, Czech Republic, Hungary and Finland), Latin America (Mexico, Peru and Chile) and Asia (China and India most significantly, but also Hong Kong, Taiwan, Thailand, Malaysia, Singapore and Australia), according to Transport Intelligence (Ti) analyst David Buckby observed. But he said Menlo’s contract logistics revenues in the US and Canada (almost all US) amount to approximately 80% of the division’s revenues, with the rest of the world accounting for about 20%.

Although the acquisition of Norbert Dentressangle significantly boosted XPO’s freight forwarding scale, Menlo only has very limited air and sea freight forwarding operations. Con-way sold Menlo’s freight forwarding business, Menlo Worldwide Forwarding – formerly Emery – to UPS in 2004.

However, analysts expect further acquisitions from XPO. The rapidly expanding US logistics group has already seen its turnover rise from just $177 million in 2011 to a predicted $9.5 billion this year, thanks to multiple acquisitions including the US$3.5 billion purchase this year of Europe’s Norbert Dentressangle and the purchase of Bridge Terminal Transport Services.