Con-way, a shipping giant that ranks as Silicon Valley’s third-largest publicly held non-electronics company, is getting bigger.
The San Mateo freight company said today that it will pay about $750 million to acquire the parent of Contract Freighters of Joplin, Mo., Con-way’s largest contractor for long-haul transcontinental trucking jobs. It’s Con-way’s biggest acquisition in a decade.
One goal behind Con-way’s offer is to expand the ways it can serve customers, enabling it to better weather inevitable downturns in the economy. The trucking industry is generally divided into specialties. One is shipping full truckloads for a single customer, another involves loading trucks with goods from various customers.
While Con-way is primarily a less-than-truckload carrier, CFI specializes in full-truckload jobs. Con-way is CFI’s largest customer, and CFI is Con-way’s largest contractor for long-haul trucking.
CFI also has a long-standing presence in Mexico, with 40 percent of its business beginning or ending in Mexico. Founded in 1951, the privately held CFI operates more than 2,600 tractors and 7,000 trailers and employs more than 3,000 workers.
Con-way had 21,800 employees as of Dec. 31, according to Bloomberg News.
“This acquisition is a cornerstone of our strategic plan to grow the company, build competitive advantage and increase shareholder value,” Con-way Chief Executive Douglas W. Stotlar said in a release.
Con-way’s bid for CFI comes at a “healthy premium,” Bear Stearns analyst Edward Wolfe wrote today in a note to investors. He rated the shares as “underperform.”
Con-way expects to close the deal by Oct. 1.
On June 7, Con-way’s Menlo Worldwide logistics subsidiary agreed to buy Cougar Holdings, a freight-forwarding unit of Singapore-based Cougar Logistics, for $28.2 million in cash and the assumption of $5.7 million in debt.
After hitting a 52-week low of $42.09 in December, Con-way’s stock has climbed 27 percent this year and hit a high of $57.48 on June 1. It was trading today at about $56.15 in mid-day trading.
