XPO Logistics has completed the sale of its truckload business to TransForce for approximately $558 million in cash, subject to customary adjustments. XPO will use the proceeds from the transaction to pay down debt.
The divested truckload operation encompasses approximately 3,000 tractors, 7,500 trailers and 29 locations that were part of the October 2015 acquisition of Con-way. XPO will continue to offer full truckload services to customers in the US, Mexico and Canada through its extensive brokerage network. XPO is the second largest freight brokerage provider in the world.
Bradley Jacobs, Chairman and CEO of XPO Logistics, said: “TransForce is getting the 19th largest asset-based truckload carrier in the US, a highly experienced workforce, and a presence in the cross-border Mexico freight corridor. 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 continued: “This 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.”
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 amortisation of approximately $10 million. The company will update its financial targets to reflect the transaction when it reports its third quarter results on November 2, 2016.