Con-way Inc. plans to buy privately held truckload carrier Contract Freighters Inc. (CFI) for $750 million in a bid to build its presence in the TL market and beef up the services offered by its Menlo Logistics subsidiary.
“As many know, we're very intent on increasing our presence in the TL sector,” said Douglas Stotlar, Con-way president & CEO, in a conference call with analysts and reporters last month.
“By integrating CFI into our company, we'll eliminate duplicative administrative and operational functions with our existing TL business, retain profitable contracts with current CFI customers, and use CFI's trans-border expertise throughout our LTL [less-than-truckload], logistics and warehousing businesses,” he added.
The deal will be structured as a merger, with San Mateo, CA-based Con-way acquiring CFI's parent company, Transportation Resources, and all other subsidiaries, funded roughly 50-50 with cash on hand and debt financing, said Kevin Schick, Con-way vp-finance & CFO. Schick added that the deal should close in the third quarter of the year, if Con-way's shareholders approve and the company gets the appropriate regulatory approvals.
Herb Schmidt, president & CEO of Joplin, MO-based CFI, said he and his entire management team will stay in place following the merger, which he believes offers CFI many opportunities.
“Becoming part of the Con-way organization will allow us to penetrate new markets and provide new services to our customers,” Schmidt said. “We think that our combined operations will make us a force to be reckoned with in the truckload market.”
Founded in 1951, CFI now operates over 2,600 tractors and more than 7,000 trailers. It employs more than 3,000 people, including approximately 2,500 drivers throughout North America.
The financial benefits of the deal — especially how it affects Con-way's profitability — won't be released until the deal closes, said Stotlar, largely because CFI is a private company. He stated that CFI is debt free so Con-way won't be assuming any debts because of the acquisition.