XPO Logistics plans to restructure its business affairs
December 3, 2020
Following recent wavering from XPO Chairman and CEO Brad Jacobs as to whether or not portions of the company would or would not be sold, XPO Logistics Inc. is indeed making a move.
The transportation and logistics behemoth, based in Greenwich, Conn., will separate the logistics segment of its business in a planned spinoff that will result in XPO shareholders owning stock in both companies.
The Dec. 2 announcement comes after unanimous approval by the company’s board of directors, which believes this decision creates two pure-play businesses offering distinct services as well as significant benefits. Additionally, a lower debt profile and enhanced earnings potential will allow each company to better achieve an investment-grade credit rating.
“By uncoupling our transportation and logistics segments, we intend to create two high-performing companies to serve the best interests of all our stakeholders,” Jacobs said in a news release. “We currently believe that this spinoff is the most effective way to unlock significant value for our customers, employees and shareholders. Both businesses will have greater flexibility to tailor strategic decision making and capital allocations.”
If the transaction moves forward as XPO projects, completion is anticipated in the second half of 2021.
So, what is to be expected post-separation?
As part of the proposal, Jacobs will remain as chairman and chief executive officer of XPORemainCo as well as serve as chairman of the NewCo brand. Troy Cooper will continue in his role as president of XPORemainCo, while executives leading XPO’s global logistics will now serve in senior positions with NewCo.
XPORemainCo aims to continue being a top provider of freight transportation as the second largest truck brokerage provider worldwide and the third-largest provider of LTL transportation in North America. XPO maintained transportation operations in 17 countries with 38,000 employees and 724 locations in addition to, logistics operations in 27 countries with 58,000 employees across 766 locations, as of Sept. 30. LL
Land Line’s contributing editor-at-large, John Bendel, contributed to the story.