From Home Furnishing Business
XPO Sells Truckload Operations in $558 Million Deal
Logistics giant XPO Logistics (XPO), whose clients include numerous furniture manufacturers and retailers, announced it has sold its truckload carrier operations to TransForce Inc. (TFI) for $558 million in cash.
The deal involves about 3,000 tractors, 7,500 trailers and 29 locations that were part of XPO’s acquisition of Con-way Inc. in October 2015.
XPO, which is the second largest freight brokerage provider in the world, said it will continue to offer full truckload services to customers in the United States, Mexico and Canada through its extensive brokerage network.
"TransForce is getting the 19th largest asset-based truckload carrier in the U.S., a highly experienced workforce, and a presence in the cross-border Mexico freight corridor,” said Bradley Jacobs, chairman and CEO of XPO. “We divested these assets to concentrate on growing our value to customers in the areas where we're leaders in the industry: contract logistics, truck brokerage, less-than-truckload, last mile, intermodal, drayage, expedite and managed transportation."
Jacobs said the transaction “strengthens our balance sheet and improves our long-term growth profile. In addition to deleveraging, the sale reduces our annual capex requirements, increases our return on capital, and lessens the cyclicality of our operations."
He said the proceeds from the transaction will be used to pay down debt.
The divested operations, which have been reported as part of XPO's Transportation segment, were expected to generate approximately $10 million of operating income for the remaining two months of 2016, and depreciation and amortization of approximately $10 million.
The company said it will update its financial targets to reflect the transaction when it reports its third quarter results on Nov. 2.