UPS buys Menlo Worldwide Forwarding
UPS has announced that it is to acquire Menlo Worldwide Forwarding (formerly Emery Worldwide) a subsidiary of US transportation company CNF, in a deal worth US$150 million in cash and the assumption of approximately US$110 million in long-term debt. The deal will be completed during the fourth quarter of 2004.
Menlo Worldwide Forwarding is a global freight forwarder present in 175 countries providing a range of heavy air freight forwarding services, ocean services and international trade management, including customs brokerage. It had US$1.9 billion in gross revenues in 2003. The division has been underperforming in recent years, and there was the belief that it was a drag on CNF’s other units which include a major US trucking business, Con-Way Transportation. The division made an operating loss for the last three years, the latest being $47.6m in 2003. The acquisition does not include Menlo Logistics or its joint venture with General Motors, Vector. However the future of these subsidiaries is unclear.
The acquisition will enable UPS to extend its range of services, especially in the US. According to the company it plans to introduce guaranteed heavy air freight services around the world, and add new time-definite products such as overnight, two-day and deferred heavy air freight in North America.
UPS first expanded into the freight forwarding sector in 2001 through the acquisition of Fritz. By adding Menlo Worldwide Freight to its portfolio it will increase its leverage in the market which should increase the competitiveness of its global logistics offering. It will also give UPS Supply Chain Solutions presence in a greater number of global markets. Fritz was highly US-centric, whilst Menlo has a greater geographic reach.
