NEW YORK (TheStreet) -- Shares of Con-way (CNW) were gaining 33.1% to $47.30 on heavy trading volume Thursday following the Wednesday announcement that XPO Logistics (XPO) will acquire the trucking company for about $3 billion.
XPO will pay $47.60 in cash to acquire all outstanding shares of Con-way under the acquisition agreement. The offer represents a 31.6% premium over Con-ways closing price on September 8, and a 22.9% premium compared to its average closing price over 90 days.
Following the acquisition Con-way will merge with a subsidiary of XPO and will become a wholly owned subsidiary of the company.
The acquisition is expected to close in October 2015.
"This landmark transaction provides immediate cash value for our shareholders and reflects the outstanding contributions of our employees over our 86-year history," Con-way President and CEO Douglas Stotlar said in a statement. "The combination will mean more services for our customers, more miles for our drivers, and more career opportunities for our employees as part of XPO`s global organization."
About 12.8 million shares of Con-way were traded by 9:38 a.m. Thursday, well above the company's average trading volume of about 995,000 shares a day.
TheStreet Ratings team rates CON-WAY INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CON-WAY INC (CNW) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, CNW has a quick ratio of 1.52, which demonstrates the ability of the company to cover short-term liquidity needs.
- CON-WAY INC's earnings per share declined by 18.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CON-WAY INC increased its bottom line by earning $2.36 versus $1.73 in the prior year. This year, the market expects an improvement in earnings ($2.45 versus $2.36).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.0%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Road & Rail industry and the overall market, CON-WAY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Looking at the price performance of CNW's shares over the past 12 months, there is not much good news to report: the stock is down 32.10%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.
- You can view the full analysis from the report here: CNW Ratings Report