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what a difference a day (and a half) makes

On Oct. 4, executives from Menlo Worldwide attending a media gathering in Philadelphia vehemently denied rumors about the sale of all or part of their company. Just 36 hours later, the story had changed. On Oct. 5,W. Keith Kennedy, interim chief of Menlo Worldwide's parent company, CNF Inc., announced that CNF was indeed selling the Menlo Worldwide Forwarding division. The buyer? UPS.

During a conference call, Kennedy dismissed speculation that CNF had embarked on a selling binge. He insisted that the company was not looking to sell any of its other divisions, which include Menlo Worldwide Logistics, Menlo Worldwide Technologies, Vector SCM and Con-Way Transportation Services. "Before, we looked at every potential transaction we could find," said Kennedy. "[But now,] our focus is trying to stabilize the units we've got and grow them." Kennedy added that CNF did not intend to use the proceeds from the sale for new acquisitions.


Menlo Worldwide Forwarding didn't come cheap. UPS paid $150 million in cash and assumed $110 million in long-term debt for the company,which registered $1.9 billion in gross revenue last year. But in UPS's eyes, it was money well spent. By acquiring the division, which was formerly known as Emery Worldwide, UPS will be able to introduce overnight, two-day and deferred heavy airfreight services in North America while boosting its plans to offer services that help customers streamline their supply chains. "This acquisition is an ideal strategic and operational fit," says Bob Stoffel, UPS's senior vice president, Supply Chain Group. "Customers want to streamline their supply chains. The expanded solutions UPS can provide will help customers simplify global trade by giving them more options for moving goods around the world and by providing a single point of accountability."

Wall Street reacted favorably to CNF's decision to unload Menlo Worldwide Forwarding, which had become a drag on earnings. Investment brokerage Robert W. Baird increased its stock rating for CNF from "neutral" to "outperform." CNF's stock shot up more than 10 percent in the days following the announcement.

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