Trucking and related services provider, XPO Logistics, has entered into an agreement to acquire Pacer Internation, the third largest provider of intermodal transportation services in North America.
Under the terms of the proposed transaction, shareholders of Pacer will receive $6.00 in cash and $3.00 of XPO Logistics common stock for each share of Pacer common stock, subject to a price collar, for a total market value of $335 million and a total enterprise value of $296 million.
The transaction is expected to close in the second quarter of 2014, subject to regulatory clearance, Pacer shareholder approval and other customary conditions. Pacer’s board of directors unanimously approved the transaction.
Pacer, founded in 1997, facilitates approximately 10% of all domestic intermodal freight movements, and is the largest provider of intermodal services between the U.S. and Mexico, according to the company. For the 12 months ended Nov. 30, 2013, Pacer generated total revenue of $1 billion, with 30 locations and approximately 950 employees.
Bradley Jacobs, chairman and chief executive of XPO Logistics, will retain these positions and lead the combined company.
Daniel Avramovich, chief executive officer of Pacer, and substantially all of Pacer’s executives have agreed to continue to lead the operations for XPO. He will serve as chief executive officer of a newly created XPO unit, which will retain its Dublin, Ohio, operations center.
“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,” said Bradley Jacobs, chairman and chief executive officer of XPO 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.”
According to XPO many of its 9,500 customers are small to mid-sized shippers and are candidates for conversion to intermodal for their long-haul freight spend. In addition, Pacer’s existing customer base will have direct access to the freight brokerage, last-mile logistics and expedited transportation services offered by XPO. In total, the combined company will serve approximately 12,000 customers with expanded capacity and a broader range of services that should generate significant revenue growth, says XPO.
In August, XPO acquired 3PD, the largest provider of heavy goods, last-mile logistics. In December, the company acquired NLM, the leading provider of web-based freight management services for the expedite sector.
After closing on the Pacer deal XPO Logistics expects to have approximately 3,200 employees at 124 locations facilitating more than 22,000 freight movements a day.
The combined company will continue to trade on the New York Stock Exchange under the symbol XPO.