XPO’s acquisition of New Breed is a done deal

Non asset-based 3PL XPO Logistics said yesterday it formally completed its acquisition of New Breed Logistics, a non asset-based 3PL focusing on contract logistics services, for roughly $615 million.

The deal was initially announced in late July, when XPO released its second quarter earnings results, as well as a separate acquisition of Atlantic Central Logistics, a 3PL provider of last-mile logistics services, for roughly $36.5 million.

XPO officials said that with the New Breed deal now official, the company now has operations in 203 locations and roughly 10,400 employees.

New Breed’s core focus on the contract logistics side centers around services related to omni-channel distribution, reverse logistics, transportation management, freight bill audit and payment, lean manufacturing support, aftermarket support, and supply chain optimization.

XPO said New Breed processes more than 275,000 orders per day, which are usually for premium, high-value products, through 171 facilities, and it has about 6,800 employees. When this deal is made official, XPO said it will have about 10,000 employees and more than 200 locations. This deal also represents the single largest acquisition XPO has made, with the August 2013 acquisition of 3PD, the largest non-asset, third party provider of heavy goods, last-mile logistics in North America, next at $365 million.

Bringing New Breed into the fold will also access entry for XPO into the contact logistics sector, which the company described as high-margin, customized services with high contractual revenue renewal rates and low cyclicality. And it added that this deal is true to the XPO strategy of acquiring leading positions in sectors where it expects sustained demand for its services, as evidenced by New Breed’s compound annual growth rate of 16 percent over the last ten years. XPO said New Breed’s growth is due largely to various vertical segments, including technology, e-commerce, aerospace and defense, medical equipment, and manufacturing.

Other key factors include: the potential for cross-selling opportunities between New Breed and XPO, with New Breed customers gaining access to truck brokerage, intermodal, expedite, last-mile, and freight forwarding; the doubling of XPO’s IT team to about 600 people; and XPO looking to integrate its XPO NLM expedited freight management platform with New Breed’s TMS, which leverage complex modeling tools for freight optimization, routing guide management, and carrier selection that is based on cost, service requirements, performance metrics, and transit times.

“We’re making a transformational move in acquiring New Breed - one that gives us critical mass and elevates our service offering,” said XPO President and CEO Brad Jacobs in July. “We’ll be able to deliver integrated, end-to-end logistics solutions for any company, of any size, with any combination of transportation needs. New Breed is a jewel in the crown of contract logistics: a world-class provider entrusted with critical services by some of the most prestigious corporate names in America. We’ll gain leadership in one of the most financially attractive sectors of contract logistics, and we’ll use our new platform to engage customers in our broader offering, just as we’ve done over the past 12 months with our acquisitions of 3PD, NLM and Pacer.”