After several years of building a logistics giant through rapid-fire acquisitions, XPO Logistics now says it’s looking into the possible sale or spin-off of one or more business units – anything but the core less-than-truckload business – as part of a “review of strategic alternatives.”
Bradley Jacobs, chairman and CEO, said the company’s stock isn’t performing as well as it should.
“XPO is the 7th best-performing stock of the last decade on the Fortune 500, based on Bloomberg market data,” he said in the announcement. “The share price has increased more than ten-fold since our investment in 2011. Still, we continue to trade at well below the sum of our parts and at a significant discount to our pure-play peers.”
XPO has not set a timetable nor determined which, if any, business units would be sold or spun off. However, the company said it does not intend to sell or spin off its North American less-than-truckload unit.
The company's stock price jumped the most in five months after the announcement, according to Bloomberg.
In a note to investors, the transportation analysts at Stifel said this “would mark at least the second major strategic pivot for XPO after first abandoning its debut brokerage roll-up strategy earlier this decade…. XPO, then, will have gone from a purely asset-light company, to an "asset-right" company, to a potentially asset-heavy LTL operator.”
Stiefel noted that since the 2015 Con-way acquisition, “management has transformed it into the second-most profitable public LTL in the industry, and we believe there remains significant opportunity for margin improvement, given the technology and process changes that are to come and are already underway.”
XPO has retained Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC as its financial advisors and Wachtell, Lipton, Rosen & Katz as its legal advisor to assist with the review process.