XPO makes NLM acquisition official
January 03, 2014
Following the December announcement that it had entered into a definitive agreement to acquire NLM, the largest provider of Web-based expedited transportation in North America from Jacksonville, Fla.-based Landstar System and Landstar’s A3i, which provides Web-based transportation and supply chain management technology focused on the order-to-cash process, non asset-based 3PL XPO Logistics said that the transaction has been made official.
As previously reported by LM, XPO funded the $87 million cash transaction through its ABL facility and available cash, including roughly $13.4 million of cash acquired on closing. XPO said that both entities will be rebranded as XPO NLM.
For the trailing 12-month period through November 2013, NLM managed roughly $500 million of gross transportation spend and generated $9.8 million of adjusted EBITDA on $23.4 million of transaction management fee revenue. XPO said it expects to acquire at closing cash of $10-to-$13 million, adding that it expects the acquisition to be immediately accretive to its earnings.
Both NLM and A3i are based in metropolitan Detroit, with automotive shippers representing a large portion of their customer bases. NLM’s Web-managed services for the expedite sector focus on where freight typically needs to be moved within a short timeframe and definitive reliability, according to XPO, adding that NLM has a proprietary online auction system that allows carriers to bid on loads that are subsequently awarded electronically which in turn generates a transaction management fee for NLM. NLM facilitates more than 450,000 shipments per year
NLM and A3i comprised Landstar’s LSCS supply operations, a group Landstar formed through separate acquisitions in 2009, when it acquired Premier Logistics, which included NLM, as well as Interactive Capacity Gateway LLC and A3 Intergration (A3i) LLC.
XPO Logistics Chairman and CEO Brad Jacobs told LM that this acquisition establishes the company’s entry into the managed transportation space, which he said XPO has been keenly interested in for some time.
“Getting into managed transportation helps us build ‘sticky’ [long-term] relationships with shippers,” explained Jacobs. “It creates good, solid, profitable long-term relationships between us and our customers.”
And he also noted there are many synergies between XPO and NLM, too. XPO is already a top-five played in the expedited market, and now it can offer all its expedited customers the option of Web-based capabilities to manage their freight, and XPO plans to scale up NLM by including managed transportation and services it offers to new and existing customers, according to Jacobs.
NLM has 123 employees and serves some of the largest and most service-sensitive shippers in North America. Since 1989, NLM has managed 4.7 million shipments, representing more than $3.5 billion in total transportation spend.
With this transaction now official, Jacobs said XPO will be facilitating more than 20,000 shipments per day throughout the U.S. and Canada. And he said XPO plans to substantially grow NLM’s business by taking NLM’s proprietary online auction system that NLM has pioneered and leads the expedited market in and cross-sell it to other verticals to all of XPO’s customers.
“We are already feeding an enormous amount of data on lane histories through our algorithms focused on pricing and truck finding,” he said. “NLM will bring more value in those areas.”
Through its automated process, Jacobs noted NLM usually finds a carrier in less than ten minutes and enable customers to manage their entire shipping process online, including bids and tracking, delivery, and invoicing.”
With NLM representing XPO’s tenth acquisition in the last two years, Jacobs said XPO’s acquisition pipeline is very lively.
“When you look at some of the verticals XPO is in, we cater to some of the most demanding, service-sensitive customers there are,” said Jacobs. “On one hand, we have expedite, which is extremely time-sensitive, time-critical freight where the service performance capabilities are expected to be in the 99 percent-plus range. Sometimes there are disastrous situations for customers that need to be avoided at all costs. We do a great job in expedited and service is part of our core culture. On the other end, we have last-mile…where service quality is also very important, too. I like the fact that XPO Logistics is currently serving the two most demanding customer groups—expedited and last-mile—and doing a good job at it.”
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