XPO Logistics to split business, forming separate transport and logistics companies

XPO Logistics is to split its business and spin-off 100% of its logistics segment as a separate publicly traded company.

If completed, the spin-off will result in two separate businesses: XPORemainCo, a global provider of less-than-truckload (LTL) and truck brokerage transportation services; and NewCo, which it describes as the “second largest contract logistics provider in the world”. Both companies are expected to trade on the New York Stock Exchange.

Brad Jacobs, chairman and chief executive officer of XPO Logistics, said, “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.

“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.”

Jacobs will continue to serve as chairman and chief executive officer of XPORemainCo, and will become chairman of the NewCo board.

The spin-off is expected to be completed in the second half of 2021, subject to conditions with XPO stating that there could be no assurance regarding timings or if the separation would be approved.

In a statement to investors XPO said separate public stock listings would enhance each company’s ability to pursue accretive merger and acquisition opportunities.

XPORemainCo, it said, would become a provider of freight transportation, primarily LTL and non-asset truck brokerage. It has transportation operations in 17 countries, with approximately 38,000 employees and 724 locations.

NewCo, as a contract logistics company, would have approximately 200 million sq f of warehouse space., offering high-value-add warehousing, omni-channel fulfilment, reverse logistics, cold-chain logistics and supply chain optimisation. It will have operations in 27 countries, with approximately 58,000 employees and 766 locations.

Jacobs posted on social media that the names XPORemainCo and NewCo would change in the long term.

In November the Competition and Markets Authority has cleared the anticipated acquisition by XPO Logistics of Kuehne + Nagel Drinkflow Logistics Holdings following an investigation.

As a result of the sale XPO will acquire the former drinks logistics, food services and retail and technology businesses of K+N. These operations generated a turnover of approximately CHF 750 million (£615.2 million) in 2019 and employ some 7,500 employees.