C.H. Robinson Worldwide Inc. said today it will acquire Phoenix International Inc., an international freight forwarder and customs broker, for $635 million in cash and stock. This transaction greatly expands Robinson's presence in the global trade and transport arena.
Under the transaction, Eden Prairie, Minn.-based Robinson will buy Chicago-based Phoenix for $571.5 million in cash and $63.5 million in newly issued Robinson stock. The transaction is expected to close in the fourth quarter, Robinson said.
To finance the cash portion of the deal, Robinson said it would use existing cash on-hand and borrow the balance. The deal is the largest in Robinson's 107-year history.
Robinson, the nation's largest truck broker and a major domestic third-party logistics (3PL) provider, has been a relatively minor player in the international marketplace. The company's existing global forwarding business accounts for only 8 percent of its transportation net revenue, according to information on its website. Transportation net revenue, defined as revenue after the cost of buying transportation services, totaled $736.2 million for the first half of 2012.
"We see significant long-term opportunity in international forwarding as global trade expands, and shippers increasingly look to transportation providers to provide global services," John Wiehoff, Robinson's chairman and CEO, said in a statement announcing the transaction.
Founded in 1979, Phoenix operates out of 76 offices in 15 countries, providing air and ocean freight forwarding and customs brokerage services to about 15,000 customers.
In its fiscal year ending June 30, Phoenix reported gross revenues—revenues before the cost of buying transportation services—of $807 million. Net revenue was $161 million in that period.
Phoenix and Robinson are non-asset-based companies, meaning they do not own any delivery assets and instead rely on air and ocean carriers to ship their customers' goods.
The acquisition will nearly double Robinson's annual ocean freight forwarding and airfreight volumes, according to Armstrong & Associates, a Stoughton, Wis.-based consultancy that closely follows the forwarding and 3PL industries. In 2011, Phoenix handled approximately 250,000 ocean twenty-foot equivalent unit (TEU) containers, as well as 41,000 airfreight tons, according to Armstrong.
Evan Armstrong, president of Armstrong, called the deal a "very significant acquisition" for Robinson that further strengthens its international transportation management capabilities. "There are very few freight forwarders of Phoenix's size headquartered in the U.S.," Armstrong said in an e-mail.
Stephane Rambaud, 48, Phoenix's current CEO, will lead the combined international forwarding services of the two companies. Bill McInerney, Phoenix's founder, will retire once the transaction is completed.