XPO Logistics will focus only on trucking, will spin off, sell other units
Source: XPO Logistics
XPO LogisticsAfter Tuesday’s closing bell, it was officially announced that the company will be solely a trucking business. It also spun off its truck brokerage and high-tech truck broker businesses into an independent publicly traded entity.
“This is one company that has become two great businesses.” CNBC interviewed Brad Jacobs (XPO chairman and CEO). CNBC reports that there are many investors interested in LTL pure play. [less-than-truckload trucking]It’s asset-based and has a high return of capital.
He said, “There is also an additional universe of investors that want to invest on an asset-light and tech-enabled truck broker platform. The spin-off will then be.”
Jacobs will continue to manage the remaining trucking company, with the ticker symbol XPO. The headquarters are located in Greenwich Connecticut. XPO will be focusing on LTL where 33% of the revenue is generated.
LTL trucking allows several customers to send goods on the same truck. This is because full truckload capacities have become harder to come by and more costly.
“We have done a great job managing the LTL company. The business has generated more than $3 billion in net cash since it was purchased. We also increased margin by 910bps. Jacobs stated that the business will be more focused after spin.
The truck brokerage business — which includes last mile delivery, freight forwarding and managed transportation — is expected to begin trading under a new name by the end of 2022. A separate management team will oversee the business, with headquarters in Charlotte North Carolina.
XPO has also reached an agreement for exclusive use with a buyer to acquire its container shipping business, which is intermodal. XPO indicated that the container shipping operation will still be part of the spinoff if this deal fails.
Company will sell or list its European operations, including trucking and truck brokerage, to get rid of the company’s European business.
Tuesday’s announcement marks a change from XPO’s growth strategies between 2011-2015 which saw the acquisition of Con-Way LTL trucker for $3 billion.
XPO declared in March 2021 that it was going to separate its contract logistics division into a public company, called GXO. These shares started trading in August 2. GXO gained approximately 17% over the past year, despite a slight decline of almost 4% in trading on Tuesday. S&P 500Over the same time period.
Jacobs explained that they learned from the GXO Spin that managers who do one thing are more productive and able to achieve growth. We also discovered that it is easier for investors to see and remove a leader in pure-play industries.
XPO ranks third in terms of revenue as the largest LTL carrier within the U.S. Customers CaterpillarAnd Tractor Supply. XPO North American LTL reported revenue of more than $4.1Billion, with 16% annual growth.
Still being determined is the price of shares as well as how many shares will be given to current XPO shareholders. XPO retained Morgan Stanley, Goldman Sachs and BofA Securities for assistance in the spinoff.