PACER INTERNATIONAL INC - FORM 8-K - EX-99.2

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8-K - 8-K - PACER INTERNATIONAL INC	d648950d8k.htm
EX-99.3 - EX-99.3 - PACER INTERNATIONAL INC	d648950dex993.htm
EX-99.1 - EX-99.1 - PACER INTERNATIONAL INC	d648950dex991.htm

XPO to Acquire Pacer International

January 6, 2014

Exhibit 99.2

Additional Information

In connection with the Merger, XPO will file with the U.S. Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that will include a Proxy Statement

of Pacer and a Prospectus of XPO, as well as other relevant documents concerning the proposed transaction. XPO AND PACER SHAREHOLDERS ARE URGED TO READ THE

PROXY STATEMENT / PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS

WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER, PACER

AND XPO. Investors and shareholders may obtain copies of these documents (when they are available) and other documents filed with the SEC at the SEC’s web site at

www.sec.gov. Investors and shareholders may also obtain, free of charge, copies of these documents filed with the SEC by XPO through the investor relations page on XPO’s

corporate website at www.xpocorporate.com or by contacting XPO Logistics, Inc. at Five Greenwich Office Park, Greenwich, CT 06831, Attention: Investor Relations. In addition,

investors and shareholders may also obtain, free of charge, copies of these documents filed with the SEC by Pacer through the investor relations page on Pacer’s corporate website at

www.pacer.com or by contacting Pacer International, Inc. at 6805 Perimeter Drive , Dublin, OH 43016, Attention: Investor Relations.

Participants in Solicitation

XPO, Pacer and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from Pacer shareholders with respect to the proposed

merger. Information about XPO’s executive officers and directors is available in XPO’s proxy statement on Schedule 14A for its 2013 annual meeting of shareholders, filed with the

SEC on April 27, 2013. Information about (1) Pacer’s executive officers and directors is set forth in Pacer’s Annual Report on Form 10-K filed with the SEC on February 8, 2013 and

(2) their ownership of the Pacer shares is set forth in Pacer’s proxy statement on Schedule 14A filed with the SEC on March 13, 2013. Investors and shareholders may obtain more

detailed information regarding the direct and indirect interests of XPO, Pacer and their respective executive officers and directors in the proposed merger by reading the Proxy

Statement/Prospectus regarding the merger when it becomes available. Copies of these documents may be obtained, free of charge, as described above. This document shall not

constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such

offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of

a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Forward Looking Statements

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of

1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be

identified by the use of forward-looking terms such as "anticipate," "estimate," "believe," "continue," "could," "intend," "may," "plan," "potential," "predict," "should," "will," "expect,"

"objective," "projection," "forecast," "goal," "guidance," "outlook," "effort," "target" or the negative of these terms or other comparable terms. However, the absence of these words does

not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our

perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances.

These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or

achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that

might cause or contribute to a material difference include, but are not limited to, those discussed in XPO’s and Pacer’s filings with the SEC and the following: economic conditions

generally; competition; XPO’s ability to find suitable acquisition candidates and execute its acquisition strategy; the expected impact of the acquisition of Pacer, including the expected

impact on XPO’s results of operations; the ability to obtain the requisite regulatory approvals, Pacer shareholder approval and the satisfaction of other conditions to consummation of

the transaction; the ability to realize anticipated synergies and cost savings; XPO’s ability to raise debt and equity capital; XPO’s ability to attract and retain key employees to execute

its growth strategy, including retention of Pacer’s management team; litigation, including litigation related to misclassification of independent contractors; the ability to develop and

implement a suitable information technology system; the ability to maintain positive relationships with XPO’s and Pacer’s networks of third-party transportation providers; the ability to

retain XPO’s and Pacer's largest customers; XPO’s ability to successfully integrate Pacer and other acquired businesses; and governmental regulation. All forward-looking statements

set forth in this document are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated will be realized or, even if

substantially realized, that they will have the expected consequences to, or effects on, XPO, Pacer or their respective businesses or operations. Forward-looking statements set forth in

this document speak only as of the date hereof, and neither XPO nor Pacer undertake any obligation to update forward-looking statements to reflect subsequent events or

circumstances, changes in expectations or the occurrence of unanticipated events except to the extent required by law.

One of the Largest 3PLs in North America

We facilitate over 20,000 shipments per day

4th largest freight brokerage firm, and Top 50 logistics company

Largest manager of expedited shipments

#1 heavy goods, white glove provider of last-mile logistics

International and domestic freight forwarder

Growing presence in managed transportation and LTL

Soon to be a top provider of intermodal services and a leader in

cross-border Mexico intermodal

Sources for rankings: Transport Topics and Journal of Commerce

Clearly Defined Strategy for Value Creation

Significantly scale up and optimize existing operations

Acquire companies that bring value and are highly scalable

Open cold-starts where sales recruitment can drive revenue

We are on track or ahead of plan with all

three legs of our growth strategy

Planned Acquisition of Pacer International

Compelling reasons for the transaction

Intermodal is one of the fastest-growing areas of transportation

logistics in North America

Pacer (NASDAQ: PACR) is the third largest provider of

intermodal services

Pacer is the largest provider of intermodal services in the high-

growth cross-border U.S.-Mexico marketplace

The combination will create company-wide cross-selling

opportunities in every area of XPO service

Sources: Transport Topics and Pacer International company data

A Strong Entry into Intermodal

XPO will gain instant scale and expertise in intermodal

Pacer manages approximately 10% of all domestic intermodal loads

in North America

Trailing 12 months revenue of approximately $1.0 billion

through November 2013

Approximately 950 employees at 30 locations serving over

3,000 customers

Will continue to be led by Dan Avramovich as CEO of the new

XPO unit, with substantially all of Pacer’s executive team

Sources: Pacer International company data

Major Intermodal Market Opportunity

$15 billion intermodal sector in North America

One of the fastest-growing areas of transportation logistics

–

Growing at three to five times GDP

Very attractive to shippers as a way to lower transportation

costs for freight traveling 600 miles or more

Pacer has built a strong intermodal presence over 16 years

Sources: American Trucking Associations, FTR Associates and Pacer International company data

–

Rail is more fuel-efficient than truckload

–

Intermodal can lower shipper’s cost by up to 15% to 20%

High-Growth Cross-border Mexico Sector

Driven by increased near-shoring by manufacturers

Mexico offers a highly attractive manufacturing environment

–

Competitively priced labor force

–

Faster speed-to-market than overseas locales

–

Can be more cost effective than cross-border truckload

Large potential universe for conversion to intermodal: an

estimated 2.8 million trucks move cross-border each year

Pacer has industry-leading cross-border expertise

Sources: AlixPartners and Pacer International company data

Immediate Synergies of Service Offerings

Combination will create company-wide cross-selling

opportunities

–

XPO will sell intermodal to over 9,500 customers

–

Pacer’s intermodal customers will have access to XPO’s full

range of services

–

Combined sales force will use strongest single point of

contact for each customer relationship

Will enhance XPO’s value proposition as a large, single-source

logistics provider with deep capacity

Source: XPO Logistics company data

Details of the Pacer Transaction

$335 million market value, cash and stock

Purchase price of $9.00 per share: $6.00 in cash, and $3.00 in

stock subject to a price collar

Enterprise value of $296 million: approximately 11.3 times

Pacer’s 2013 consensus EBITDA of $26.1 million, and 9.1 times

2014 consensus EBITDA of $32.6 million

XPO has obtained committed transaction financing from Credit

Suisse AG for up to $325 million in senior secured loan facilities

Transaction expected to close in 2Q 2014 and be significantly

and immediately accretive to XPO’s earnings

–

Will double XPO’s annual revenue run rate to $2 billion

Acquisition Aligns with XPO’s Strategy

XPO is committed to providing the services customers need most

Will continue to acquire leading positions in the fastest-growing

areas of logistics

–

Acquired 3PD and Optima in 2013: leaders in last-mile

–

Acquired NLM in 2013: leader in web-based managed

transportation for expedite

–

Pacer will make XPO a major intermodal provider and the

largest provider in the cross-border Mexico sector

Pipeline still active for potential acquisitions

Completed 10 strategic acquisitions and opened 23 cold-starts

in two years

Created leading edge recruiting and training programs

Introduced scalable IT platform

Established national operations centers in Atlanta, Charlotte

and Chicago

Raised $543 million in common stock and convertible debt

offerings, and entered into a $125 million ABL facility

Stratified customers, assigned a single point of contact to each

Disciplined focus on operational excellence

Precise Execution of Growth Plan

Strong Industry Fundamentals

Sources: American Trucking Association, Armstrong & Associates

U.S. logistics is more than $1 trillion annual spend

Over-the-road trucking is $350 billion

Penetration rate estimated at 15% (approximately $50 billion)

–

85% of shipments are not presently handled by brokers

Brokers add efficiency to both shippers and carriers

–

Shippers gain access to thousands of carriers, carriers gain

access to millions of loads

Highly fragmented: more than 10,000 licensed brokers in the U.S.

–

Only about 25 brokers with more than $200 million in revenue

Massive Commitment to Shipper Satisfaction

Built integrated network across North America in two years

Over 2,200 employees at 94 locations in the U.S. and Canada

9,500 customers in the manufacturing, industrial, retail, food

and beverage, commercial, life sciences and government

sectors

Over 24,000 active, vetted carriers, and approximately 400

trucks under exclusive contract

Constantly investing in growing capacity, technology, sales

staff, procurement staff and training

Our broad footprint provides customers with local support

across North America

Rapidly grow sales force with aggressive recruiting and

training

Expand freight brokerage branches capable of mega-growth

Capture more of the $50 billion less-than-truckload (LTL)

opportunity

Continue intense focus on on-time pickup and delivery

–

We are experienced at satisfying some of the most demanding

shippers in North America, including last-mile and expedite

Strategy Part 1: Scale and Optimization

Accelerate Sales and Marketing

Differentiate XPO by providing world-class customer service

Single point of contact for each customer

–

Strategic accounts team marketing to largest 1,200 shippers

–

National accounts team focused on next largest 5,000

companies

–

Branch network expands our reach to hundreds of thousands

of small and medium-sized shippers

Capitalize on significant less-than-truckload (LTL) opportunity

Cross-sell all services to new and existing customers

One common platform for freight brokerage rolled out in all

acquired companies

Purchase transportation more efficiently as data pool grows

Proprietary freight optimizer tools for pricing and load-covering

put in place in 2012

Enhancements delivered to date include carrier rating engine

and LTL upgrades, and new customer and carrier portals

Scalable Technology Platform

Increasing Productivity through Technology

Highly scalable load execution and tendering via automated

load-to-carrier matching

Dynamic load optimization on a transactional basis between

full truckload, less-than-truckload, partials and intermodal

Ability to automatically cover, execute and tender loads in a

short timeframe

Customer-specific business rules to manage carrier routing

and assignment, and operational execution

Enhanced TMS Services

Our operating system can customize customer-specific tariffs

and routing guides

We can integrate an ERP system, warehouse management

system or supply chain management system with XPO

via electronic data interchange or web services

Large customers can leverage our technology, buying power,

automated load execution platform, freight audit and bill pay

services through the customer portal

Carriers can be monitored with detailed scorecards

Acquire attractive, highly scalable companies

Gain capabilities, customers, carriers, lane and pricing histories

with each acquisition

Continue to grow carrier network, currently at over 24,000

10 acquisitions to date have added capabilities in LTL,

last-mile, refrigerated, air charter, managed transportation,

and soon intermodal

3PD, Turbo, Kelron and Covered brought strong relationships

with Fortune 500 customers

Optima expanded 3PD’s last-mile capabilities and technology

Strategy Part 2: Acquisitions

Hire strong industry veterans as branch presidents

Position in prime recruitment areas

Rapidly scale up by adding salespeople

Low capital investment can deliver outsized returns

Opened 23 cold-starts to date

–

11 in freight brokerage, 11 in freight forwarding,

one in expedited

–

Brokerage cold-starts on a combined annual revenue run

rate of over $140 million

Strategy Part 3: Cold-starts

Founded and led four highly successful companies,

including world-class public corporations

Amerex

Oil

Associates:

Built

one

world’s

largest

oil

brokerage

firms

Hamilton

Resources:

Grew

global

oil

trading

company

~$1

billion

United

Waste:

Created

5th

largest

solid

waste

business

North

America

United

Rentals:

Built

world’s

largest

equipment

rental

company

United Waste stock outperformed S&P 500 by 5.6x from 1992 to 1997

United Rentals stock outperformed S&P 500 by 2.2x from 1997 to 2007

CEO Bradley S. Jacobs

Highly Skilled Management Team

Partial list

NCR, Avery Dennison, Arrow Electronics

Electrolux, Union Pacific, Odyssey Logistics

3PD, Inc., Home Depot

Affinity Logistics, GeoLogistics, Exel

Stifel Nicolaus, Alex. Brown

C.H. Robinson, American Backhaulers

Sean Fernandez

Chief Operating Officer

Lou Amo

Vice President, Carrier Procurement

Karl Meyer

Chief Executive Officer, 3PD division

Charles Hitt

Chief Operating Officer, 3PD division

John Hardig

Chief Financial Officer

Marie Fields

Director of Training

The full management team can be found on www.xpologistics.com

Echo Global Logistics

Oakleaf Waste Management

Dave Rowe

Chief Technology Officer

Mario Harik

Chief Information Officer

AutoNation, Skadden Arps

Goldman Sachs, UBS, JPMorgan Chase

Gordon Devens

General Counsel

Scott Malat

Chief Strategy Officer

United Rentals, United Waste

Troy Cooper

Senior Vice President, Operations

Deep Bench of Industry Experience Partial list

C.H. Robinson

AFN, CEVA Logistics, Menlo

Crowley Maritime, Coyote

C.H. Robinson

OHL, Schneider Logistics

Ryder Supply Chain Solutions, BAX Global

Ryder Integrated Logistics, Cardinal Logistics

Livingston International, Echo Global Logistics

Jake Schnell

Sr. Operational Process and Integration Manager

Evan Laskaris

Director of Operations, Chicago

Kip Douglass

Regional Vice President

Patrick Maguire

Branch President, Montgomery

Brandon Arnold

Carrier Procurement and Operations Manager

Drew Wilkerson

Branch President, Charlotte

Jenna Sargent

Regional Sales and Operation Manager

Greg Tallant

National Account Manager

Will O’Shea

Chief Sales and Marketing Officer, 3PD division

Andrew Armstrong

Sales and Operations Manager

AFN, Ryder Integrated Logistics

Doug George

Branch President, Dallas

The full management team can be found on www.xpologistics.com

2011 revenue of $177 million

Currently at approximately $1 billion annual revenue run rate

42% YOY organic revenue growth company-wide in Q3

–

Freight brokerage organic growth –

up 146.1%

Q3 2013 total revenue: $194.0 million

(1)

–

up 173.3% YOY

–

Freight brokerage: $152.6 million –

up 374.4%

–

Expedited transportation: $25.1 million –

up 5.7%

–

Freight forwarding: $19.1 million –

up 10.5%

Key Financial Statistics

(1)

Net of intercompany eliminations

Source: Company data

Incentivized XPO Management

Equity ownership aligns management team with shareholders

Management and directors own approx. 41% of the company

(1)

Based on SEC beneficial ownership calculation as of September 30, 2013

(2)

Dilutive effect of warrants calculated using treasury method (avg. market close price of $22.31 for Q3 2013); total warrant proceeds of $75 million

(3)

Assumes conversion in full of $143.75 million in aggregate principal amount of convertible senior notes issued in September and October 2012

(4)

As of September 30, 2013, dilutive effect of Q3 2013 weighted average outstanding RSUs and stock options calculated using treasury method

(avg. market close price of $22.31 for Q3 2013)

Common Stock Equivalent Capitalization as of 9/30/13

Common Shares

29.9 million

Preferred Shares

10.6 million

Warrants (Strike Price $7 per share)

10.7 million (7.3 million dilutive)

(2)

Convertible Senior Notes

8.7 million shares

(3)

Stock Options and RSUs

1.3 million shares dilutive

(4)

Fully Diluted Shares Outstanding

57.9 million shares

Large, growing, fragmented logistics industry

Well-defined process to scale up operations

Planned acquisition of Pacer International

Robust pipeline of further acquisition prospects

Strong organic growth, including cold-starts

Highly skilled management team incentivized to create

shareholder value

Passionate, world-class culture of customer service

Clear Path for Significant Value Creation

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