The trucking company C.H. Robinson Worldwide, Inc.'s CHRW plan to acquire privately held Freightquote.com Inc. for $365 million is "a step in the right direction" for Robinson, an analyst said Wednesday.
Freightquote, one of the largest Internet-based freight brokers, is expected to post 2014 net revenue of $124 million compared with Robinson's expected $13.45 billion.
Robinson announced the deal Monday and said it's expected to close in the first quarter of 2015.
"We've long argued that technology innovations will reduce the need for human brokers," Morgan Stanley's William J. Greene said in a note.
The acquisition should help Robinson increase its market share among small, infrequent shippers, who prefer automated services to telephone interactions with human brokers, Greene said.
Freightquote has seen operating income grow at 30 percent on a compounded five-year basis, while its net revenue margin of 20 percent is higher than Robinson's 15 percent.
Robinson attributed Freightquote's relatively wide margin to its emphasis on high-margin, less-than-truckload business, which accounts for two-thirds of its net revenue. Freightquote counts about 80,000 customers.
Greene said Freightquote's reliance on small shippers will result in little overlap with Robinson's customer base, and hence little "cannibalization" of revenue.
Morgan Stanley is acting as a financial adviser to Freightquote in its deal with Robinson.
Robinson traded recently at $74.53, up 1.25 percent.
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