XPO Logistics Inc (NYSE:XPO) is acquiring France’s Norbert Dentressangle SA for $3.53 billion. The deal is considered as of great significance as it would result in a second-largest freight brokerage entity in the world. As per the deal, the company won’t reduce the full-time headcount in France for minimum one and half years from conclusion of the deal. Also, headquarter will remain at Lyon as the new entity’s European headquarters. The combined company will have approximately $8.5 billion in annual revenue.
XPO in the past has disclosed its plans to achieve revenue of $9 billion by 2017. It was before the company announced the acquisition of Norbert Dentressangle. In the filing with SEC, the company termed the deal as a “major leap forward,” and added that it still in early phases of long-term growth plan. Norbert Dentressangle CEO Hervé Montjotin will become Chief Executive of XPO’s European business. He will also serve as the President of the parent entity.
There are many several U.S.-based firms who are looking for cross-border deals. The prime reason behind their hunt is the strong economic recovery in the Europe. In fact, the U.S. Suitors confirmed acquisitions worth $201. 6 billion of Western European firms in the past twelve months. The number is jumped considerably from last year. In April, FedEx Corporation (NYSE:FDX) agreed to acquire TNT Express NV – ADR (OTCMKTS:TNTEY) for $4.8 billion.
The currency game
XPO Logistics Inc (NYSE:XPO) is set to benefit from a strong U.S. dollar relative to the euro. In fact, the strong currency has made the deal much less expensive compared to January, 2015. Europe witnessed tough economic conditions in the past few years and it seems as it is the start of rebound in the Euro zone. The company intends to take financing from Morgan Stanley and will utilize $1 billion in cash.