XPO Logistics begins the process of (maybe) breaking itself up
Story by:@ FreightWaves
The end of XPO Logistics, Inc. as the transport and logistics industries have come to know it may be at hand. According toand his article.
Company looks to sell or spin off one or all units, with LTL off the block; CEO Jacobs sees chance of firm becoming pure-play LTL operator
The $17 billion giant (NYSE:XPO) has begun entertaining possible acquisition offers for four of its units: its two North American and two European transport and logistics businesses. Failing to execute a sale or sales that XPO finds satisfactory, the company may spin off one, two or all four of the units. The North American less-than-truckload (LTL) operation will not be sold or spun off, the company said. XPO has retained Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC as its financial advisers, and Wachtell, Lipton, Rosen & Katz as its legal adviser.
In an interview late Wednesday two hours after the announcement, Brad Jacobs, XPO’s founder, chairman and CEO, left open the real prospect of XPO eventually evolving into a pure-play LTL operator with no debt and an enormous pile of capital.
The company stressed in its announcement that nothing may come of the sale or spinoff discussions, and that there is no time frame for deals to be consummated, if they are at all. However, the tenor of Jacobs’ comments appear to make a do-nothing outcome unlikely. Jacobs is hell-bent on enhancing shareholder value, saying it is no longer acceptable that XPO’s shares trade at a significant discount to its pure-play peers, despite a 10-fold rise in the company’s stock price since 2011.
XPO currently trades at 9.3 times earnings before interest, taxes, depreciation and amortization (EBITDA). According to Jacobs, Old Dominion Freight Line Inc. (NASDAQ:ODFL), a pure-play LTL carrier and arguably the segment’s best-run operator, trades at 13.5 times current EBITDA. Saia Inc. (NASDAQ:SAIA) another well-run LTL player, trades at about 10 times EBITDA, Jacobs said.
Story continues HERE @ freightwaves.com
Source and credits: freightwaves.com // iTrucker / Mario Pawlowski