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XPO Logistics, Inc.: XPO Logistics to Acquire New Breed Logistics and Completes Acquisition of Atlantic Central Logistics

2014-07-29 22:30:00
Ticker Giełda ISIC Kraj Miasto
XPO XNYS U.S.A. Greenwich

New Breed is the leading U.S. provider of complex, technology-enabled contract

logistics for blue chip companies in high-growth sectors

ACL expands XPO's last mile services in e-commerce logistics

Combined transaction value of approximately $652 million is expected to add more

than $660 million of revenue and $83 million of EBITDA annually

GREENWICH, Conn. - July 29, 2014 - XPO Logistics, Inc. ("XPO Logistics" or "XPO"

or the "Company") (NYSE: XPO) today announced that it has entered into a

definitive agreement to acquire New Breed Holding Company ("New Breed"), the

preeminent U.S. provider of non-asset based, complex, technology-enabled

contract logistics for blue chip customers. The company further announced that

it has completed the acquisition of Atlantic Central Logistics ("ACL"), a non-

asset based provider of last mile logistics with 14 East Coast locations.

New Breed Acquisition

On July 29, 2014, the company agreed to acquire New Breed for a purchase price

of $615 million on a cash-free, debt-free basis, and assuming a normalized level

of working capital. At the closing, New Breed's chief executive officer, Louis

DeJoy, will use $30 million of proceeds from the transaction to purchase

restricted stock from the company. New Breed had revenue of approximately $597

million and adjusted EBITDA of approximately $77 million for the trailing 12

months ended June 30, 2014. The value of the transaction represents a

consideration of approximately 8.0 times trailing 12 months adjusted EBITDA. The

transaction is expected to close in the third quarter of 2014, subject to Hart-

Scott-Rodino clearance and other customary conditions.

Founded in 1968, New Breed became focused on technology-oriented supply chain

innovations under the leadership of Mr. DeJoy, who became chairman and chief

executive officer in 1983. Mr. DeJoy transformed New Breed from a regional

business with 10 employees into the preeminent U.S. provider of complex,

industry-defining contract logistics services. Once the transaction is complete,

Mr. DeJoy will lead XPO's contract logistics business as its chief executive

from the current operations center in High Point, N.C.

New Breed specializes in services for omni-channel distribution, reverse

logistics, transportation management, freight bill audit and payment, lean

manufacturing support, aftermarket support and supply chain optimization. It

handpicks its customers in industries with high-growth outsourcing opportunities

for complex supply chain requirements. New Breed processes over 275,000 orders

per day - typically premium, high-value products - through 71 facilities, and

employs approximately 6,800 people. After closing, XPO expects to have

approximately 10,000 employees and more than 200 locations.

Compelling Strategic Rationale for New Breed Acquisition

* XPO will gain entry into the most desirable sector of contract logistics:

customized services with solid margins, high contractual revenue renewal

rates and low cyclicality. New Breed's revenue renewal rate for the past

three years has been approximately 99%.

* New Breed's non-asset based business model generates a high return on

capital and strong free cash flow conversion. Capital expenditures for 2013

were 4.2% of revenue and largely devoted to developing proprietary

information technology. For the full year 2013, New Breed's return on

invested capital was approximately 38% and free cash flow conversion was

approximately 71%.([1])

* The acquisition is consistent with XPO's strategy of building a broad and

integrated logistics offering by acquiring leading positions in sectors

where it expects sustained demand for its services. For the past 10 years,

New Breed has increased revenue at a compound annual growth rate of 16%, and

realized a compound annual growth rate of 19% on adjusted EBITDA. New

Breed's growth is being driven by its focus on attractive customer

verticals, namely technology, telecom, e-commerce, aerospace and defense,

medical equipment and manufacturing.

* The capabilities of both companies are complementary, and the combination is

expected to create significant cross-selling opportunities. New Breed's

customers are candidates for the truck brokerage, intermodal, expedite, last

mile and freight forwarding services XPO offers, as are the tens of

thousands of vendors that move freight in and out of New Breed facilities.

In addition, many of XPO's strategic accounts utilize the kind of high-

quality, customized solutions New Breed offers.

* Both XPO and New Breed have an intense commitment to cutting edge

technology. The combination will double XPO's IT workforce to approximately

600 talented, forward-thinking IT professionals innovating new ways to serve


* XPO expects to integrate its XPO NLM expedited freight management platform

with New Breed's transportation management system to offer customers highly

engineered managed transportation solutions. New Breed's applications use

complex modeling tools to deliver dynamic freight optimization, routing

guide management, and carrier selection based on cost, service requirements,

performance metrics and transit times.

[1] Free cash flow conversion equals EBITDA minus capex, divided by EBITDA.

Return on invested capital equals ongoing operations EBIT divided by the sum of

net working capital and net PP&E.

Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said,

"We're making a transformational move in acquiring New Breed - one that gives us

critical mass and elevates our service offering. We'll be able to deliver

integrated, end-to-end logistics solutions for any company, of any size, with

any combination of transportation needs. New Breed is a jewel in the crown of

contract logistics: a world-class provider entrusted with critical services by

some of the most prestigious corporate names in America. We'll gain leadership

in one of the most financially attractive sectors of contract logistics, and

we'll use our new platform to engage customers in our broader offering, just as

we've done over the past 12 months with our acquisitions of 3PD, NLM and Pacer.

When the transaction is complete, we'll have an IT workforce of more than twice

its current size, and about 10,000 employees at over 200 locations."

The company has obtained commitments from Credit Suisse AG, Morgan Stanley

Senior Funding, Inc., Citigroup Inc. and Deutsche Bank AG for a total of up to

$645 million in senior secured term loan facilities to fund the New Breed

transaction and general corporate purposes, including potential future

acquisitions. The transaction is not conditioned on financing.

Credit Suisse Securities (USA) LLC is serving as financial advisor to XPO

Logistics, and Wachtell, Lipton, Rosen & Katz is acting as legal advisor. Morgan

Stanley & Co. LLC is serving as financial advisor to New Breed, and Willkie Farr

& Gallagher LLP is acting as legal advisor.

ACL Acquisition

On July 28, 2014, the company completed its acquisition of Atlantic Central

Logistics for a cash purchase price of $36.5 million on a cash-free, debt-free

basis, and excluding any working capital adjustments. ACL had revenue of $63

million and adjusted EBITDA of $6.2 million for the trailing 12 months ended

June 30, 2014. The value of the transaction represents a consideration of

approximately 5.9 times trailing 12 months adjusted EBITDA.

Founded in 1980, ACL provides last mile logistics through approximately 200

contracted carriers and 160 employees at 14 East Coast locations. ACL focuses on

serving the burgeoning demand for e-commerce fulfillment by facilitating the

time-sensitive, local movement of goods between distribution centers and the


Karl Meyer, chief executive officer of XPO Last Mile, said, "The acquisition of

ACL expands our presence in the high-growth e-commerce sector, where we manage

more last-mile deliveries of heavy goods than any other logistics provider.

ACL's delivery patterns complement those of XPO Last Mile, allowing us to

leverage capacity as we increase our volume. We welcome the ACL team to XPO Last

Mile, where our combined expertise will be a compelling value to retailers and

their channel partners."

About XPO Logistics, Inc.

XPO Logistics, Inc. (NYSE: XPO) is one of the fastest growing providers of

transportation logistics services in North America: the fourth largest freight

brokerage firm, the third largest provider of intermodal services, the largest

provider of last-mile logistics for heavy goods, and the largest manager of

expedited shipments, with growing positions in managed transportation, global

freight forwarding and less-than-truckload brokerage. The company facilitates

more than 31,000 deliveries a day throughout the U.S., Mexico and Canada.

XPO Logistics has 148 locations and approximately 3,100 employees. Its three

business segments - freight brokerage, expedited transportation and freight

forwarding - utilize relationships with ground, rail, sea and air carriers to

serve over 14,000 customers in the manufacturing, industrial, retail,

commercial, life sciences and government sectors. The company has more than

3,600 trucks under contract to its drayage, expedited and last-mile

subsidiaries, and has access to additional capacity through its relationships

with over 27,000 other carriers. For more information: www.xpologistics.com

About New Breed

New Breed is the preeminent U.S. provider of non-asset based, highly engineered

contract logistics solutions for blue chip customers. New Breed's service

offering includes omni-channel distribution, reverse logistics, transportation

management, freight bill audit and payment, lean manufacturing support,

aftermarket support and supply chain optimization for customers in technology,

telecom, e-commerce, aerospace and defense, medical equipment and manufacturing.

Headquartered in High Point, N.C., New Breed's national footprint focuses on key

logistics hubs such as Memphis, Chicago, Dallas-Fort Worth, Atlanta, Seattle and

southern California. In total, New Breed operates 71 facilities and employs

approximately 6,800 people. For more information: www.newbreed.com.

Forward-looking Statements

This press release includes forward-looking statements within the meaning of

Section 27A of the Securities Act of 1933, as amended, and Section 21E of the

Securities Exchange Act of 1934, as amended. All statements other than

statements of historical fact are, or may be deemed to be, forward-looking

statements. In some cases, forward-looking statements can be identified by the

use of forward-looking terms such as "anticipate," "estimate," "believe,"

"continue," "could," "intend," "may," "plan," "potential," "predict," "should,"

"will," "expect," "objective," "projection," "forecast," "goal," "guidance,"

"outlook," "effort," "target" or the negative of these terms or other comparable

terms. However, the absence of these words does not mean that the statements are

not forward-looking. These forward-looking statements are based on certain

assumptions and analyses made by us in light of our experience and our

perception of historical trends, current conditions and expected future

developments, as well as other factors we believe are appropriate in the


These forward-looking statements are subject to known and unknown risks,

uncertainties and assumptions that may cause actual results, levels of activity,

performance or achievements to be materially different from any future results,

levels of activity, performance or achievements expressed or implied by such

forward-looking statements. Factors that might cause or contribute to a material

difference include, but are not limited to, those discussed in XPO's filings

with the SEC and the following: economic conditions generally; competition;

XPO's ability to find suitable acquisition candidates and execute its

acquisition strategy; the expected impact of the acquisitions of New Breed and

ACL, including the expected impact on XPO's results of operations; the ability

to obtain the requisite regulatory approvals and the satisfaction of other

conditions to consummation of the New Breed transaction; the ability to realize

anticipated synergies and cost savings with respect to acquired companies; XPO's

ability to raise debt and equity capital; XPO's ability to attract and retain

key employees to execute its growth strategy, including New Breed's and ACL's

management teams; litigation, including litigation related to alleged

misclassification of independent contractors; the ability to develop and

implement a suitable information technology system; the ability to maintain

positive relationships with XPO's networks of third-party transportation

providers; the ability to retain XPO's and acquired companies' largest

customers; XPO's ability to successfully integrate New Breed, ACL and other

acquired businesses; rail and other network changes; weather and other service

disruptions; and governmental regulation. All forward-looking statements set

forth in this press release are qualified by these cautionary statements and

there can be no assurance that the actual results or developments anticipated

will be realized or, even if substantially realized, that they will have the

expected consequences to, or effects on, XPO or its businesses or operations.

Forward-looking statements set forth in this document speak only as of the date

hereof, and XPO undertakes no obligation to update forward-looking statements to

reflect subsequent events or circumstances, changes in expectations or the

occurrence of unanticipated events except to the extent required by law.

Investor Contact:

XPO Logistics, Inc.

Tavio Headley, +1-203-930-1602


Media Contacts:

Brunswick Group

Gemma Hart, Darren McDermott, +1-212-333-3810

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Source: XPO Logistics, Inc. via GlobeNewswire