CFI trucking company sold

By Melissa Dunson

JOPLIN, Mo. — Contract Freighters Inc. has been acquired for $750 million by Con-way Inc., a freight transportation and logistics services company with headquarters in San Mateo, Calif.

The senior management team of Contract Freighters Inc. will continue on after the sale to Con-Way is complete, representatives announced Monday. The deal is expected to be finalized by the end of August.

Douglas Stotlar, Con-way’s president and chief executive officer, also said the company will keep all CFI’s structures and facilities intact, and allow CFI to use Con-way’s facilities as well.

In addition to the Joplin headquarters and terminal, CFI operates four other terminals in the United States and Mexico and 37 sales offices.

“We’re excited about the transaction,” said Herb Schmidt, president and chief executive officer of CFI. “When we combine our operational excellence and their resources, we will be a force to be reckoned with. Just think of what we can do together. It’s just plain exciting.”

The acquisition will join CFI with Con-way’s existing Con-way Truckload division and create a business unit with more than $500 million in annual revenues for truckload freight. Stotlar said the CFI acquisition will allow for greater efficiency in both Con-Way and CFI’s operations.

“The immediate synergies we’re looking at are integrating our truckload carriers, then the purchasing synergies and some administrative synergies,” Stotlar said. “It’s really an opportunity to enhance each business. By managing the businesses together, we can get more out of each of them.”

CFI has experienced only single-digit growth the past several years, but Schmidt said it was intentional and at the request of the company’s majority shareholder who wanted CFI to focus on improving its profit margins.

Schmidt said CFI has a history of aggressive growth and is ready to grow as a part of Con-way after the merger is complete.



Combining resources

Schmidt said Con-way was CFI’s biggest customer, representing 6 percent of its annual revenue. CFI is also a significant part of Con-way’s business and is the largest provider of contract services for long-haul transcontinental truckload transportation.

CFI was already doing business with Menlo Logistics, a $600 million arm of Con-way that manages transportation services for its customers. The acquisition will let CFI and Menlo collaborate their trucks to provide more efficient and expanded services.

Schmidt said CFI will also benefit from the acquisition because there will be more work for its drivers, meaning there will be fewer “empty miles” driven with record-breaking high fuel prices.

“Empty miles is a huge problem,” Schmidt said. “There will be synergy just by reducing the number of empty miles driven. And the effect of saving the money lost on empty miles is proportionally higher now than 10 years ago because of the fuel prices.”

Stotlar said Con-way will also take advantage of CFI’s 20 year presence in Mexico to improve the strength of both companies across the border.

Stotlar said Con-way has looked at how much both companies will save by merging, and while he wouldn’t give exact numbers, said the conservative base estimate is very profitable. Con-way is estimating the merger will have a neutral affect on 2007 revenues in the fourth quarter, but by 2008 will be solidly profitable. Stotlar said he will release the projections once the transaction is finished.

Schmidt said CFI is a debt-free company, and Stotlar said the purchase will be funded with Con-way’s existing cash resources and proceeds from debt financing. The lead financial adviser in the merger was Morgan Keegan & Co., with help from Goldman, Sachs & Co.

The acquisition will be structured as a merger in which Con-way acquires CFI’s parent holding company, Transportation Resources, Inc., CFI and all other subsidiaries of the parent company. The boards of both companies have approved the transaction, but it still has to be approved by regulatory authorities.

Stotlar said Con-way had not decided yet how to proceed with the branding of the new merger, but will know more as the integration process continues.



Melissa Dunson writes for The Joplin (Mo.) Globe.

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