XPO Logistics To Buy Pacer International In $335 Mln Cash, Stock Deal - Update

(RTTNews) - XPO Logistics, Inc. (XPO) a provider of transportation logistics services, announced Monday that it has agreed to acquire Pacer International, Inc. (PACR), a provider of intermodal transportation services, in a cash and stock transaction valued at $335 million.

Under the deal terms, each Pacer shareholder will receive $6.00 in cash and $3.00 of XPO Logistics common stock, subject to a price collar. The total enterprise value of the deal, which has been unanimously approved Pacer's board of directors, would be $296 million.

The company stated that the deal price represents a premium of about 8 percent compared to the closing price of Pacer on January 3, and a premium of 22 percent compared to the average closing price over the last 90 trading days.

The company expects the acquisition to close in the second quarter, subject to regulatory clearance, Pacer shareholder approval and other customary conditions. XPO expects the cash and stock transaction to be significantly and immediately accretive to its earnings.

According to XPO, Pacer facilitates about 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 billion, with 30 locations and approximately 950 employees.

XPO noted that the acquisition will double its annual revenue run rate to $2 billion.

It was reported earlier that the addition of Pacer would greatly bolster XPO Logistics' ability to provide rail services and give it a big fleet of domestic containers that can ride on both truck and rail.

XPO Logistics Chairman and Chief Executive Bradley Jacobs 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 expect this transaction to be significantly and immediately accretive to our earnings and accelerate our growth company-wide."

Jacobs will continue to lead the combined firm, while Pacer Chief Executive Officer Daniel Avramovich will serve as chief executive officer of a newly created XPO unit, which will retain its Dublin, Ohio, operations center. The company said it has obtained a commitment from Credit Suisse AG for up to $325 million in senior secured term loan facilities to fund the Pacer deal. The transaction is not conditioned on financing.

In the transaction, Credit Suisse Securities (USA) LLC is serving as financial advisor to XPO Logistics, and Wachtell, Lipton, Rosen & Katz is acting as legal advisor.

Morgan Stanley & Co. LLC is serving as financial advisor to Pacer, and Winston & Strawn LLP is acting as legal advisor. XPO closed Friday's trading at $28.03, up $0.72 or 2.64 percent. Pacer shares closed trading at $8.33, down $0.13 or 1.54 percent. In pre-market activity, Pacer shares gained $0.27 or 3.24 percent, and traded at $8.60.