What Hedge Funds Think About XPO Logistics Inc (XPO)’s Acquisition Of Con-way Inc (CNW)

Con-way Inc (NYSE:CNW) is among the top gainers on Thursday, as the stock is currently trading at more than 33% up from its closing price on Wednesday. The logistics and supply-chain management service provider announced after the market close on Wednesday that it has agreed to be acquired by XPO Logistics Inc (NYSE:XPO) for a deal worth around $3 billion or $47.6 per share. The transaction also includes a net debt of $290 million. On the other hand, XPO Logistics Inc (NYSE:XPO) is among the biggest losers on Thursday as the stock has plunged 11% today following the acquisition announcement.

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This acquisition would elevate XPO Logistics Inc as the second largest less-than-truckload (LTL) provider in North America. This deal follows many other similar third-party logistics provider acquisition by XPO, which included companies like Coyote Logistics and Norbert Dentressangle. XPO intends to increase Con-way Inc (NYSE:CNW)’s operating profit by around $170 – $210 million in the next two years. All of Conway’s subsidiaries will be rebranded as XPO Logistics and XPO’s CEO Bradley Jacobs will continue to lead the combined company.

Year-to-date Con-way Inc (NYSE:CNW) stock has lost around 30% before the jump today. On the other hand, XPO Logistics Inc (NYSE:XPO) lost around 26% YTD, including the huge drop today. Let’s take a look at what hedge funds think about Con-way Inc (NYSE:CNW) and XPO Logistics Inc (NYSE:XPO) and whether they were expecting this acquisition.

Looking at hedge fund activity on Con-way Inc, there were capital inflows into the stock during the second quarter. By the end of June, there were 19 hedge funds with around $318.1 million investment in the stock. However, 21 hedge funds had 34% lower investment in the stock at the end of March. Considering the fact that the stock had dropped nearly 13% during the second quarter, we can rather say that hedge funds were bullish on the stock and expecting this kind of a deal to cash in. XPO Logistics Inc also received similar bullish bets from hedge funds as there was investment worth around $969.7 million by the end of June, compared to $689.9 million worth shares held by 34 hedge funds by the end of March, despite the fact that the stock value had remained almost neutral through the second quarter.