XPO to Split Logistics, Trucking Into Separate Companies
XPO to Split Logistics, Trucking Units Into Separate Companies
(Bloomberg) -- XPO Logistics Inc. is cleaving its trucking and logistics businesses into separate publicly traded companies, almost a year after saying it was looking for strategic alternatives.
The spinoff will occur as a tax-free transaction to shareholders, the Greenwich, Connecticut-based company said in a statement Wednesday. One company will focus on less-than-truckload hauling and transportation brokerage services, with current XPO Chairman and Chief Executive Officer Brad Jacobs remaining in those positions. The other operation will be the world’s second-largest contract logistics company, according to the statement.
“Both businesses will have greater flexibility to tailor strategic decision-making and capital allocations to their end-markets,” Jacobs said in the statement. Jacobs will be chairman of the logistics company, which will be run by that operation’s current leaders.
The split is designed to give each business a more defined focus after Jacobs built XPO to $17 billion of annual sales from $180 million in 2011 when he bought control of the company. Investors and analysts sometimes found XPO difficult to follow because of the combination of the contract-logistics and transportation businesses.
“By simplifying the business model and strengthening the focus of each resulting company, a spinoff is the optimal way to unlock significant equity value,” the company said.
XPO said in January that it had retained advisers to review strategic options, including the sale or spinoff of one or more units. A sale of its European supply-chain business slowed after a key bidder dropped out of the process, people with knowledge of the matter said last week. XPO had revived the sale of the European business after pausing the process during the coronavirus pandemic, Bloomberg News reported in October.
XPO has transportation operations in 17 countries with about 38,000 employees and 724 locations. The logistics business has operations in 27 countries with about 58,000 employees and 766 locations.
Both of the companies are expected to trade on the New York Stock Exchange. The separation is expected to close in next year’s second half.
XPO rose 2.2% to $112.45 after the close of regular trading in New York. The stock had gained 38% this year.
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