XPO plans to split into two parts
GREENWICH — Transportation-andlogistics giant XPO Logistics announced that it plans to split into two separately run and publicly traded companies, a decision that came after it started to consider the sale of key businesses earlier this year.
Greenwich-based XPO plans to retain its global transportation operations — which are primarily truck brokerage and “less-than-truckload” shipping services — while spinning off its global contract-logistics business. The company, which employs about 100,000 globally and produced about $17 billion in revenues in 2019, ranks as one of the largest in its industry and placed No. 196 on this year’s Fortune 500 list.
“By uncoupling our transportation and logistics segments, we intend to create two high-performing, pure-play companies to serve the best interests of all our stakeholders,” XPO CEO and Chairman Bradley Jacobs said in a statement Wednesday evening. “Both businesses will have greater flexibility to tailor strategic decision-making and capital allocations to their end-markets, with the benefit of strong positioning as customer-focused
innovators. We currently believe that this spin-off is the most effective way to unlock significant value for our customers, employees and shareholders.”
The spin-off would be tax-free to shareholders, who would hold stock in both companies, according to company officials.
If the spin-off is completed, Jacobs would continue to serve as CEO and chairman of XPO and also become chairman of the new company’s board.
XPO officials anticipate the transaction’s completion in the second half of 2021. The closing depends on certain conditions such as the refinancing of XPO’s debt on terms satisfactory to the XPO board of directors and final approval by the board.
Spinning off the logistics business does not come as a surprise: The company announced in January that it was considering a sale or spin-off of one or more of its businesses, not including its North American less-than-truckload division.
“Still, we continue to trade at well below the sum of our parts and at a significant discount to our pure-play peers,” Jacobs said at the time. “That’s why we believe the best way to continue to maximize shareholder value is to explore our options, while remaining intensely committed to the satisfaction of our customers and employees.”
After COVID-19 first started spreading across the U.S., the company terminated that undertaking. But the review was apparently revived later in the year.
Company shares closed Wednesday at about $110, down 0.34 percent from Tuesday. Their 52-week high is about $112.
Before the pandemic, XPO had grappled with a number of challenges in the past couple of years. In early 2019, the company disclosed a $600 million hit, worth twothirds of its transactions with its largest customer. XPO declined to name a client, but it was widely believed to be Amazon.
After the spin-off is completed, the remaining XPO business would function as the second-largest truck-brokerage provider in the world and the third-largest less-than-truckload provider in North America, according to XPO officials.
As of Sept. 30, XPO’s transportation services ran in 17 countries, with 38,000 employees across 724 locations.
The company does not plan to lay off any employees as a result of the spin-off, an XPO spokesman said Wednesday in response to an inquiry from Hearst Connecticut Media.
The new spun-off company would operate as the second-largest contract-logistics company in the world, with 200 million square feet of warehouse space, according to the company.
As of Sept. 30, XPO had “asset-light” logistics operations in 27 countries, with 58,000 employees across 766 locations.