XPO Logistics plans to pursue a spin-off of 100% of its global logistics segment as a separate publicly traded company, allowing each of the two resulting companies to better focus on their respective businesses.
Early this year, XPO announced that after several years of building a logistics giant through rapid-fire acquisitions, it was investigating selling or spinning off parts of its business that weren’t the core less-than-truckload operations.
“After a thorough examination of all strategic alternatives, the XPO board currently believes that the optimal path to unlock aggregate equity value is to create two independent companies that are each well-equipped to capitalize on secular growth trends in their sectors,” the company said in a Dec. 2 announcement.
If completed, the spin-off will result in separate businesses with clearly delineated service offerings, both expected to trade on the New York Stock Exchange:
- XPORemainCo, a global provider of less-than-truckload and truck brokerage transportation services
- NewCo, the second-largest contract logistics provider in the world.
“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,” said Brad Jacobs, chairman and CEO, in a news release. “Both businesses will have greater flexibility to tailor strategic decision-making and capital allocations to their end-markets.”
For instance, each business would be able to deepen its differentiation by having its technology team focus on enhancing the proprietary software developed for its specific service offering — notably, the XPO Connect digital transportation platform and XPO Smart productivity tools for logistics and LTL operations.
Separate public stock listings would enhance each company’s ability to pursue merger and acquisition opportunities, according to the announcement, with the benefit of an independent equity currency at a potentially higher value.
If the spin-off is completed as expected: Jacobs will continue to serve as chairman and CEO of XPORemainCo, and will become chairman of the NewCo board. Troy Cooper will continue to serve as XPORemainCo’s president. The executives currently leading XPO’s global logistics segment will continue to serve in senior positions with NewCo.
The planned transaction would be tax-free to XPO shareholders, who would own stock in both companies, the company said. The transaction is expected to be completed in the second half of 2021, subject to various conditions.