XPO Logistics is strengthening its expedited business and its technology infrastructure by acquiring two supply-chain subsidiaries from Landstar System.
XPO Logistics will acquire NLM, which provides Web-based expedited transportation services, and supply chain services business A3i for $87 million.
Landstar, the fourth-largest truckload U.S. carrier, acquired NLM and A3i in 2009 and ran them as separate subsidiaries of Landstar Supply Chain Solutions.
The sale of LSCS is expected to generate $50 million in additional cash for Landstar, after estimated working capital adjustments, the trucking company said.
Landstar’s revenue was down by $36.6 million or 5.4 percent year-over-year in the third quarter at $680.5 million, hampered by very slow economic growth.
Chairman, President and CEO Henry Gerkens said the technology-based supply chain subsidiaries were no longer a good fit for Landstar’s asset-light business.
“We have come to believe LSCS is better suited for a company-store type operation rather than Landstar's core agent-based model,” Gerkens said in a statement.
NLM and A3i will fit well into XPO’s growing portfolio, whichs include freight brokers, an expedited carrier, freight forwarders and logistics companies.
"NLM, the largest Web-based expediter in North America, will give us an entry into managed transportation,” said Bradley S. Jacobs, XPO chairman and CEO.
XPO’s Express-1 Expedited Solutions is the fifth-largest expedited carrier, with about $94 million in revenue in 2012, according to SJ Consulting Group.
NLM will build on Express-1’s expedited business by providing precise Web-based capabilities for bidding, scheduling, shipping and tracking freight, Jacobs said.
For the trailing 12 months through November, NLM, formerly National Logistics Management, managed about $500 million of gross total transportation spend.
NLM generated $9.8 million of adjusted earnings before taxes, interest, depreciation and amortization on $23.4 million of transaction management fee revenue.