SAN MATEO, Calif. and JOPLIN, Mo., July 16 /PRNewswire-FirstCall/ --
Con-way Inc. (NYSE: CNW) today announced that it has entered into an
agreement to acquire Contract Freighters, Inc. (CFI), a privately held
North American truckload carrier based in Joplin, Mo., in a transaction
valued at $750 million.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060418/SFTU007LOGO )
Founded in 1951, CFI is a respected, industry-leading service provider
that today operates over 2,600 tractors and more than 7,000 trailers, with
more than 3,000 employees including approximately 2,500 drivers that serve
customers throughout North America.
The acquisition elevates Con-way into a unique position in the freight
transportation industry, creating a leading less-than-truckload (LTL),
truckload (TL) and supply chain management enterprise with a broad
portfolio of high-value solutions, noted Douglas W. Stotlar, Con-way's
president and CEO.
"Acquiring CFI is a significant addition to Con-way's ability to serve
the customer. It establishes a superior platform for growth, clearly
differentiating Con-way as a premier provider of supply chain and freight
transportation solutions," said Stotlar. "This acquisition is a cornerstone
of our strategic plan to grow the company, build competitive advantage and
increase shareholder value."
The acquisition will join CFI with Con-way's existing Con-way Truckload
division, creating a business unit with over $500 million in annual
revenues for truckload freight. Together with the complementary
capabilities of LTL carrier Con-way Freight, and global supply chain
services provider Menlo Logistics, the Con-way organization will deliver an
expanded transportation and logistics platform to North America-based
shippers as well as global businesses, from "first-mile" sourcing in Asia
or Europe, to "last-mile" delivery in North America.
"We are excited to join the Con-way family of operating companies. CFI
will benefit from Con-way's infrastructure, broad service capabilities and
strong brand recognition," said Herb Schmidt, president and CEO of CFI.
"Becoming part of the Con-way organization will allow us to penetrate new
markets and provide new services to our customers. In addition, Con-way and
CFI share service philosophies and common values such as safety, integrity,
commitment, and excellence."
The companies expect to realize a number of strategic benefits from the
Diversified revenue mix. The combined truckload operations will
generate approximately $500 million in truckload revenue for the Con-way
enterprise, enabling the company to reach a more diversified mix between
LTL, TL and logistics revenues, helping to moderate the effects of cyclical
swings in the business units.
Improved truckload operations. Con-way's existing truckload operations
will be integrated into CFI's headquarters in Joplin, Mo. Moving this under
CFI's best-in-class operating and management practices will markedly
improve profitability on Con-way Truckload's existing revenue generated
through dedicated line-haul services for its sister LTL company Con-way
Retained contract carrier margins. CFI is Con-way Freight's largest
provider of contract services for long-haul transcontinental truckload
transportation. The acquisition will enable Con-way to retain margins from
this contract business. In addition, Con-way Freight is CFI's largest
customer, and the company foresees opportunities to further optimize
freight operations for both the LTL and truckload networks through this
Enhanced Mexico presence. With operations in Mexico for nearly 20
years, CFI is recognized as one of that country's leading transportation
providers, and is among the largest participants in the market for
cross-border truckload freight. Combining CFI's network, experience and
expertise with Con-way Freight's Mexico network and Menlo's in-country and
border-based logistics operations significantly improves the combined
company's presence and capabilities in Mexico.
Expanded presence in key industries. CFI's strong customer base in the
retail and consumer products industries complements Con-way Freight's
strength in the industrial and manufacturing sector, and also aligns well
with Menlo Logistics' principal industry verticals.
Larger network footprint. The acquisition creates one of the most
extensive infrastructure networks for less-than-truckload transportation,
truckload, and supply chain, distribution and logistics management, as well
as the sixth largest truck transportation company in North America.
Synergies with Menlo Logistics. Menlo manages approximately $600
million in domestic truckload transportation services on behalf of its
customers, some of which already is handled by CFI. The acquisition will
present opportunities for CFI and Menlo to collaborate, where practical, on
freight flows to further optimize operations for its customers, introduce
new services, and drive efficiencies in the Con-way network, all while
fulfilling Menlo's responsibility to deliver the best-cost transportation
solution focused first on the requirements of its customers.
Accelerated growth opportunities, expanded services portfolio. As a
combined company, Con-way and CFI will deliver a more comprehensive service
menu for the heavy-weight freight portion of the industry, and will be able
to leverage assets and networks to grow the company with complementary new
products and services, across a larger and more diverse customer base.
Stotlar and Schmidt both cited the similar cultures and focus on
service integrity, which are inherent to both organizations, as a key
factor in joining the companies. CFI and Con-way are each known for
exceptional operational execution, and have market reputations as
top-performing carriers with respected, professional management and high
service levels. Their cultures consistently emphasize employee-driven
values and a focus on efficient, exemplary service for customers.
Concluded Stotlar, "We're very excited about this acquisition and the
positive effect that joining these two industry leaders will have on the
transportation and logistics market. This is a unique and powerful fit of
two successful companies that together have great prospects for growth, and
for driving sustainable service advantage for our customers, opportunities
for our employees and increasing value for our shareholders."
The acquisition will be structured as a merger as a result of which
Con- way will acquire CFI's parent holding company, Transportation
Resources, Inc., CFI and all other subsidiaries of the parent holding
company. The acquisition is subject to customary review by regulatory
authorities and fulfillment of closing conditions. The boards of directors
of both companies have approved the transaction, which is expected to
conclude during the 2007 third quarter. Con-way intends to fund the
acquisition with existing cash resources together with proceeds from debt
financing. The company believes that the allocation of capital to this
acquisition will be more accretive than alternative uses of funds.
Lead financial advisor on the acquisition for Con-way Inc. was Morgan
Keegan & Co., with additional advisory support and financing for the
acquisition provided by Goldman, Sachs & Co.
Con-way and CFI executives will discuss the acquisition in a conference
call for the financial community today, Monday, July 16 at 11:00 a.m.
Eastern Daylight Time (8:00 a.m. Pacific). The conference call can be
accessed at 1-866-264-3634 from the U.S. and Canada, passcode 7519595, and
also will be available to other interested parties through a live Webcast
on the Con-way Web site, http://www.con-way.com. The live call will be
available to international callers at (706) 643-3632. A replay of the call
will be available starting at 1:00 pm EDT on July 16 by calling
1-800-642-1687, passcode 7519595. International callers can access the
replay at (706) 645- 9291.
About Con-way Inc.
Con-way Inc. (NYSE: CNW) is a $4.2 billion freight transportation and
logistics services company headquartered in San Mateo, Calif. Named FORTUNE
magazine's "Most Admired Company" in transportation and logistics for 2007,
Con-way delivers industry-leading services through three primary operating
companies: Con-way Freight, Con-way Truckload Services and Menlo Logistics.
These operating units provide high-performance, day-definite less-than-
truckload and full truckload and intermodal freight transportation, as well
as logistics, warehousing and supply chain management services, and trailer
manufacturing. Con-way Inc. and its subsidiaries operate from more than 500
locations across North America and in 20 countries. For more information
about Con-way, visit us on the Web at http://www.con-way.com.
CFI is the leading service carrier in the North America truckload
market. Founded in 1951 with one tractor and two trailers, the company now
operates 2,600 tractors and 7,000 trailers and serves shippers throughout
the continent. CFI was one of the first carriers to establish operations in
Mexico and for its excellence in export service, CFI received the
President's "E" and "E-Star" Awards. The company is also ISO 9001-2000
certified. CFI's Web site can be found at http://www.cfi-us.com. CFI's site
is also available in Spanish, located at http://www.cfi-mx.com.
Certain statements in this press release constitute "forward-looking
statements" and are subject to a number of risks and uncertainties and
should not be relied upon as predictions of future events. All statements
other than statements of historical fact are forward-looking statements,
including any projections and objectives of management for future
operations, any statements concerning proposed new products or services,
any statements regarding Con-way's estimated future contributions to
pension plans, any statements as to the adequacy of reserves, any
statements regarding the outcome of any claims that may be brought against
Con-way, any statements regarding future economic conditions or
performance, any statements of estimates or belief, any statements
regarding the proposed acquisition of CFI and proposed related financing,
and any statements or assumptions underlying the foregoing. Specific
factors that could cause actual results and other matters to differ
materially from those discussed in such forward-looking statements include:
changes in general business and economic conditions, the creditworthiness
of Con-way's customers and their ability to pay for services rendered,
increasing competition and pricing pressure, changes in fuel prices or fuel
surcharges, the effects of the cessation of the air carrier operations of
Emery Worldwide Airlines, the possibility that Con-way may, from time to
time, be required to record impairment charges for long-lived assets, the
proposed acquisition of CFI and proposed related financing (including
without limitation the possibility that such acquisition may not be
consummated due to failure of regulatory approval or other closing
conditions to be satisfied, risks relating to the financing, integration
risks and risks that acquisition synergies are not realized), the
possibility of defaults under Con-way's $400 million credit agreement and
other debt instruments (including without limitation defaults resulting
from unusual charges), and the possibility that Con-way may be required to
repay certain indebtedness in the event that the ratings assigned to its
long-term senior debt by credit rating agencies are reduced, labor matters,
enforcement of and changes in governmental regulations, environmental and
tax matters, matters relating to the 1996 spin-off of Consolidated
Freightways Corporation ("CFC"), including the possibility that CFC's
multi-employer pension plans may assert claims against Con-way, matters
relating to the sale of Menlo Worldwide Forwarding, Inc., including
Con-way's obligation to indemnify the buyer for certain losses in
connection with the sale, and matters relating to Con-way's defined benefit
pension plans. The factors included herein and in Item 7 of Con-way's 2006
Annual Report on Form 10-K as well as other filings with the Securities and
Exchange Commission could cause actual results and other matters to differ
materially from those in such forward-looking statements. As a result, no
assurance can be given as to future financial condition, cash flows, or
results of operations.
SOURCE Con-way Inc.