UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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EXPRESS-1 EXPEDITED SOLUTIONS, INC.
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On June 24, 2011, Dealmakers Monthly magazine published the following news story on its website,
www.dealmakers-monthly.com, in the electronic version of its June 2011 issue. The news story is
based on an interview with Bradley S. Jacobs, managing member of Jacobs Private Equity, LLC. The
text of this news story is provided below.
Jacobs Private Equity: A winning investment
Jacobs Private Equity founder and managing director, Bradley S. Jacobs, leads an investment in
Express-1 Expedited Solutions, a non-asset-based, third-party logistics (“3PL”) transportation
services provider that he plans to grow into a multi-billion dollar business in the next few years.
Jacobs explains how.
Bradley Jacobs knows a thing or two about building businesses and making spectacular successes
out of the toughest challenges.
Since 1979, he has founded and led four highly successful companies, including two
multi-billion dollar, publicly-traded corporations: United Rentals, the world’s largest equipment
rental company, and United Waste Systems, the fifth largest solid waste company in the U.S. at the
time of its sale in 1997 for $2.5 billion.
Forever looking for new challenges, Jacobs has now homed in on one: Express-1. He now plans
to build a multi-billion dollar transportation brokerage business out of this investment in which
he and minority co-investors will invest an aggregate of up to $150 million in cash, including
amounts payable upon exercise of the options and warrants described below.
“I plan to build Express-1 into a multi-billion dollar business over the next several years,”
says Jacobs. “Express-1 is an ideal platform, with prominent positions in expedited services,
freight brokerage and freight forwarding. I’m excited about leading the company into its next
phase of growth.”
Express-1 offers expedited transportation solutions, domestic and international freight
forwarding, and premium truckload brokerage services to retail, commercial, manufacturing and
industrial customers. The company uses a network of relationships with ground, sea and air
carriers to find the best transportation solutions for its customers. It offers its services
through three distinct business units: Express-1, Inc. (expedited transportation solutions), the
fifth largest US expedited freight service provider, according to The Journal of Commerce; Concert
Group Logistics (domestic and international freight forwarding); and Bounce Logistics (premium
truckload brokerage).
Serving over 4,000 retail, commercial, manufacturing and industrial customers through six US
operations centres and 22 agent locations, Express-1 completed more than 144,000 transactions for
customers and generated revenues of approximately $158 million in 2010.
The investment seems absolutely ideal for Jacobs — one he has been looking for since 2007,
when he stepped down as chairman of United Rentals.
“I love taking an idea, a concept at a very early stage that is originally abstract and making
it concrete, materialising it. Hiring people and buying companies, getting more customers and
increasing revenues and profits, I just enjoy doing all that. I like running companies, I like
building companies. It keeps me ticking.”
As chairman of United Rentals from 1997 through 2007, Jacobs grew the company to $3.9 billion
in revenues, with more than 700 branch locations, 13,000 employees, and a ranking as the 536th
largest public corporation in America by Fortune magazine. He has been instrumental in raising
more than $6 billion through dozens of financings in the debt and equity markets since 1992.
In 1989, Jacobs founded United Waste and built it into the fifth largest solid waste
management business in North America. In 1987, he founded Hamilton Resources (UK), a worldwide oil
trading company that served major oil companies and oil-producing countries and generated annual
revenues of approximately $1 billion. In 1979, he co-founded Amerex Oil Associates, creating one
of the world’s largest oil brokerage firms, with an annual gross contract volume of approximately
$4.7 billion.
If Jacobs’ past records are anything to go by, Express-1 is destined for success.
“I like Express-1 because it has got legs in three areas that I am very interested in —
truckload brokerage, expedited transportation and freight forwarding. Between the three of those
markets, that’s about a 200 billion dollar addressable market opportunity. So in the previous
industries that I have consolidated, I never had such a big ocean to go fishing in as this.”
“This also isn’t about a business plan that just revolves on acquisitions, it is about growth.
Small companies like Express-1 are limited because of working capital requirements. And the
access to capital markets that I bring to the table solves that problem. We plan to bring a lot of
capital into the company and into the industry to grow. The business is also right up my alley.
It perfectly matches my experience and my skill-set. I feel very comfortable in this industry.”
The transportation sector is a $1.3 trillion industry in the US, while freight-brokerage firms
have been growing at a rate of double to triple GDP. Jacobs talked to about 100 companies and
decided upon “asset-light” companies rather than “asset-heavy” (which actually own the trucks) due
to returns on capital being much higher.
Jacobs also chose Express-1 because he wanted a public vehicle: he is comfortable in the
public markets and wanted access to the capital markets. He didn’t want to be slowed down by
having to take a company public.
He also knew Express-1 had good managers, solid operations, had been growing and could be
scaled up. He met current Express-1 CEO Mike Welch and the management team, and they both felt
that it was a good fit.
“We are very pleased that Brad has decided to make such a significant commitment to advancing
Express-1’s position in the industry,” Welch states. “We view his decision as a strong vote of
confidence in the calibre of our employees and our operations.”
Jacobs will now lead Express-1 as its new CEO, besides being its majority shareholder, and
chairman of the board of directors. Welch will work alongside Jacobs to identify acquisition
targets.
Says Jacobs: “Express-1 will be turbo-charged by this investment. In my new position, I’ll
be overseeing the day-to-day running of the business to ensure our plans to transform the business
into a multibillion dollar industry leader in the next few years stay on track. That said, the
culture at Express-1 will not change significantly. For example, the current management team will
stay with the business, though their roles may change, and they will be supplemented by additional
talent.”
Under the terms of the agreement, the minority investors will receive convertible preferred
stock, convertible into approximately 43 million shares of the company’s common stock at a price of
$1.75 a share, and warrants to purchase an additional approximately 43 million shares of the
company’s common stock at an exercise price of $1.75 per share. The figures will be adjusted for a
4:1 reverse stock split that the company will implement upon the closing of the transaction. The
purchase of the convertible preferred stock will represent an initial investment of $75 million,
and the exercise of the warrants will represent an additional investment of up to $75 million. The
transaction, which has been approved by the company’s board of directors, is subject to the receipt
of shareholder approval and other customary closing conditions.
Express-1’s eight-person board will change, with just one of the original board members
remaining. However, none of Express-1’s current locations will close and there are no plans to
reduce headcount, says Jacobs. “The investment is about growth,” he added, “and I intend hiring
more senior executives and salespeople to position the company for success.”
Jacobs is not deterred by venturing into transportation, given his prior experience of the
sector.
“All the four companies that I started and built up into large companies had some aspects of
logistics and transport to them,” explains Jacobs. “My first two companies were oil businesses.
We were moving a lot of crude oil and refined products in tankers around the world. And the
detailed logistical aspects of that were a big part of the equation.
“The third company that I started, United Waste Systems, became the fifth largest solid waste
management business in North America. It involved collecting garbage and bringing it to landfills
for recycling, sorting and
composting it. We had quite a big fleet of garbage trucks and other vehicles, so there was
transportation and logistics involved there.
“The fourth company that I started, United Rentals, which later became the world’s largest
rental company, was ranked by Transportation Topics as the 24th largest private dedicated carrier
in the US. It had quite a significant fleet of equipment to move between branches and from
branches to the yards of customers. So I have always been around logistics and transportation
throughout my career.”
Jacobs adds: “In fact, the first company that I started was Amerex, a brokerage firm
brokering crude oil and refined petroleum products, but if you went into any of the offices of
Amerex they would look very similar to what you’d see in Express-1, people sitting around desks
with telephones and computers matching together carriers and shippers. So I am ready to take over
the reins of a transportation services provider. It is going to be my concentrated passion for the
foreseeable future.”
Jacobs is now focused on putting his strategy into action and transforming Express-1 into an
industry leader, with several billion dollars in revenue in the next few years. In doing so,
Jacobs is simply following a playbook that is extremely familiar to him, given his long track
record of successfully growing businesses.
[End of news story]
Additional Information and Where to Find It
In connection with the proposed equity investment by Jacobs Private Equity, LLC, the Company will
prepare a proxy statement to be filed with the SEC. When completed, a definitive proxy statement
and a form of proxy will be mailed to the stockholders of the Company. THE COMPANY’S STOCKHOLDERS
ARE URGED TO READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTIONS BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. The Company’s stockholders will be able to obtain, without charge, a copy of
the proxy statement (when available) and other relevant documents filed with the SEC from the SEC’s
website at http://www.sec.gov. The Company’s stockholders will also be able to obtain, without
charge, a copy of the proxy statement and other relevant documents (when available) by directing a
request by mail or telephone to Express-1 Expedited Solutions, Inc., Attn: Secretary of the Board
of Directors, 3399 South Lakeshore Drive, Suite 225, Saint Joseph, Michigan 49085, telephone: (269)
429-9761, or from the Company’s website, www.xpocorporate.com.
Jacobs Private Equity, LLC and the Company and its directors and officers may be deemed to be
participants in the solicitation of proxies from the Company’s stockholders with respect to the
proposed equity investment. Information about the Company’s directors and executive officers and
their ownership of the Company’s common stock is set forth in the proxy statement for the Company’s
2011 Annual Meeting of Stockholders, which was filed with the SEC on April 29, 2011. Stockholders
may obtain additional information regarding the interests of the Company and its directors and
executive officers in the proposed equity investment, which may be different than those of the
Company’s stockholders generally, by reading the proxy statement and other relevant documents
regarding the proposed equity investment, when filed with the SEC.
Cautionary Statement Regarding Forward-Looking Statements
The communications included herein contain forward-looking statements. Statements that are not
historical facts, including statements about beliefs or expectations, are forward-looking
statements. These statements are based on plans, estimates and projections at the time the
statements are made, and readers should not place undue reliance on them. In some cases, readers
can identify forward-looking statements by the use of forward-looking terms such as “may,” “will,”
“should”, “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,”
or “continue” or the negative of these terms or other comparable terms. Forward-looking statements
involve inherent risks and uncertainties and readers are cautioned that a number of important
factors could cause actual results to differ materially from those contained in any such
forward-looking statements. Factors that could cause actual results to differ materially from those
described in the communications contained herein include, among others: uncertainties as to the
timing of the equity investment; the possibility that competing transaction proposals will be made;
the possibility that various closing conditions for the equity investment may not be satisfied or
waived; the possibility that the warrants, if issued, will not be exercised; general economic and
business conditions; and other factors. Readers are cautioned not to place undue reliance on the
forward-looking statements included in the communications contained herein, which speak only as of
the date such statements were made. Neither the Company nor any other person undertakes any
obligation to update any of these statements in light of new information or future events.