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C.H. Robinson to Take Over Freightquote.com for $365M

Leading third-party logistics company, C.H. Robinson Worldwide Inc. (CHRW), revealed its intentions to acquire Freightquote.com Inc for $365 million in cash. The deal will be financed through the company’s revolving credit facility and is expected to close in the first quarter of 2015, subject to regulatory approval.

Based in Kansas City, Freightquote.com was founded in 1998 by Tim Barton. The company is engaged in intermodal freight businesses and operates in North America. Notably, the company targets to achieve annual revenues of $623 million in 2014.

As online shopping is much in rage, it will consistently create new challenges for future supply chain management. Thus, in a bid to improve its supply chain network, C.H. Robinson’s decision to buy Internet-based freight brokers is a strategic fit as it will not only strengthen its market position in Kansas City but will also open up new avenues.

Over the last three years, C.H. Robinson bought two logistics service providers, namely, Phoenix International and Poland-based freight forwarder – Apreo Logistics S.A. C.H. Robinson also entered into a $500 million revolving unsecured credit facility in order to part finance the acquisition of Phoenix.

Exiting third-quarter 2014, C.H. Robinson had a mere $128 million of cash and $500 million of long-term debt. Hence, we believe that the company’s intent to continuously expand its network through inorganic means will not only pressurize its cash position but will also increase leverage, moving ahead.

Further, the company expects to incur annual amortization expenses of approximately $16.3 million over the next eight years related to the acquisition of intangible assets from the Phoenix buyout. Consequently, amortization expenses coupled with rising interest burden will undermine profitability for C.H. Robinson going forward.

Stocks to Consider

C.H. Robinson has a Zacks Rank #2 (Buy). Other stocks which warrant a look in this sector include Matson, Inc. (MATX), Echo Global Logistics Inc. (ECHO) and Expeditors International of Washington Inc. (EXPD). Matson sports a Zacks Rank #1 (Strong Buy) while the other two carry a Zacks Rank #2.

Read the Full Research Report on CHRW
Read the Full Research Report on EXPD
Read the Full Research Report on MATX
Read the Full Research Report on ECHO


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