XPO Logistics, the company formed by entrepreneur Bradley S. Jacobs to establish a multi-billion dollar presence primarily in the truck brokerage industry, has acquired broker Turbo Logistics from third-party logistics provider (3PL) OHL Inc. for $50 million in cash.
The acquisition, announced late Thursday, is the third and largest yet for Greenwich, Conn.-based XPO. Earlier this year it announced purchases of brokers in Canada and in South Carolina.
Brenéwood, Tenn.-based OHL said it has used the proceeds from the sale to pay down debt.
Phillip Corwin, OHL's vice president of marketing, said the standalone, transactional nature of the brokerage business no longer fit with the company's strategic mission of providing end-to-end supply chain solutions, of which transportation procurement is just one piece.
Corwin said OHL's customers "generally engage us in multi-year contracts to provide global supply chain services. They look to OHL to procure transportation and manage those relationships as part of their distribution strategies."
Based in Gainesville, Ga., about 55 miles northeast of Atlanta, Turbo has annual revenue of approximately $125 million. About 45 percent of its revenue comes from dry van services, 31 percent from refrigerated transport, and about 15 percent from expedited, or time-definite, services.
In an interview yesterday, Jacobs said XPO will keep all of Turbo's employees as well as its standalone operations in Gainesville and in Reno, Nev. Turbo's facilities in Chicago and Dallas will be merged with XPO's operations there, he said.
Jacobs added that one of the advantages of the acquisition is that Turbo's Gainesville and Reno locations are each in close proximity to several colleges and universities. This will help with XPO's aggressive recruitment efforts, he said. "This business is all about people," said Jacobs, noting that XPO has hired 125 salespersons in the last 90 days.
Like many freight companies, publicly traded XPO has felt the effects of the recent softness in volumes as businesses grapple with subpar end demand and a host of political and economic uncertainties. "There's just less freight out there," Jacobs said. XPO will report its third-quarter results Nov. 6.
Last year Jacobs invested $150 million in cash in a nonasset-based expedited transportation company called Express-1 Expedited Solutions Inc., renamed the company, and installed himself as CEO. His goal is to create a $5 billion- to $6 billion-a-year enterprise mostly by unifying a deeply fragmented truck brokerage segment through acquisitions and organic expansion that XPO calls "cold starts." Jacobs said XPO has launched 12 cold starts this year.
The Turbo acquisition will put XPO close to Jacobs' goal of reaching $500 million in annual revenue in 2012, more than double its 2011 revenue totals.