XPO Logistics to buy Pacer International for $335 million
American third-party logistics provider of freight transportation services XPO Logistics will buy the third largest provider of intermodal transportation services in North America, Pacer, for $335 million.
Pacer, founded in 1997, facilitates approximately 10 percent of all domestic intermodal freight movements, and is the largest provider of intermodal services between the U.S. and Mexico. For the trailing 12 months ended November 30, 2013, Pacer generated total revenue of $1.0 billion, with 30 locations and approximately 950 employees.
According to Reuters, the deal will boost XPO's rail services and give it a big fleet of domestic containers that can ride on both truck and rail. It will also double XPO's annual revenue to about $2 billion.
Bradley Jacobs, Chairman and Chief Executive Officer of XPO Logistics, said: “We’ve viewed Pacer as a valuable acquisition candidate for quite a while. This transaction will make us the third largest North American provider of intermodal services, one of the fastest-growing areas of transportation logistics. We’ll also be the largest provider of intermodal services in the burgeoning cross-border Mexico market, where growth is being driven by a trend toward near-shoring manufacturing. We expect this transaction to be significantly and immediately accretive to our earnings and accelerate our growth company-wide.
“In the last few months, we’ve added leading platforms in some of the fastest-growing areas of logistics: our 3PD last-mile business, our purchase of NLM – the leader in web-managed transportation for expedite – and now Pacer, our eleventh acquisition in two years. When this transaction is complete, we believe that our value proposition for customers will be among the strongest in the industry.”
Daniel Avramovich, Chairman and Chief Executive Officer of Pacer, said: “After a comprehensive exploration of strategic alternatives, we are confident that a combination with XPO maximizes value for Pacer shareholders. This transaction will provide our shareholders with significant immediate cash value for their investment in Pacer, while giving them the opportunity to participate in the substantial upside potential created by bringing Pacer into XPO. This exciting combination is a testament to our dedicated employees who will have new opportunities as part of a larger organization. We will be introducing intermodal to thousands of new customers through the XPO Logistics network, and we look forward to working closely with XPO to ensure a seamless integration.”