GM to buy Vector interest for $85 million
Con-way Inc. will receive $84.8 million from General Motors to dissolve their Vector logistics joint venture, the San Mateo-based freight handling company said Monday.
GM announced last June that it would exercise its option to buy out Vector SCM, the joint venture formed with Con-way's contract logistics subsidiary Menlo Worldwide in late 2000 to act as the automaker's global lead logistics provider. It said at the time that the move was made to exert more direct control over its logistics functions.
After receiving presentations from each side, an arbiter determined the non-asset-based partnership is worth $96.4 million, with GM scheduled to pay Con-Way $84.8 million on Jan. 5 for its share of the company.
The valuation falls at the high end of the range predicted by analysts. Last summer Baird senior research analyst Jon Langenfeld valued Vector at $50 million. Bear Stearns analyst Edward Wolfe estimated the purchase price would fall between $80 million and $100 million.
Nonetheless, Vector was a small cog in Con-way’s $4.2 billion freight transportation empire.
Con-way said it expects to log a net gain from the transaction in its fourth quarter results. Under the agreement, Menlo will retain non-GM customers served by Vector.