Transportation & Logistics Company XPO Wins Bid To Acquire 28 Service Centers Of Bankrupt Yellow Corp., Sees EPS Accretion

XPO Inc XPO disclosed winning an auction for 28 service centers of Yellow Corporation and its subsidiaries across the U.S. for around $870 million.

The auction, held on November 28, 2023, includes the assumption of three asset leases. This also comprises the right to designate, in consultation with Yellow, additional contracts that are related exclusively to the acquired assets, for 45 days following the consummation of the buyout.

The buyout is at par with XPO's LTL 2.0 growth plan and is expected to be accretive to adjusted EBITDA and dilutive to adjusted EPS from continuing operations per share in 2024.

XPO projects the Yellow Asset Acquisition to be accretive to adjusted diluted earnings from continuing operations per share from 2025.

As of Q3-end, XPO had cash and cash equivalents of $335 million.

Yesterday, the company reported November 2023 operating metrics, with LTL tonnage per day decreasing 0.4% YY on a decline of 4.1% in weight per shipment and a rise of 3.8% in shipments per day.

While announcing the November operating metrics, Mario Harik, chief executive officer said, "We're continuing to make good progress on a number of fronts in the fourth quarter despite the soft freight market...And our yield ex-fuel growth is tracking ahead of expectations for the quarter, with continued strength heading into 2024."

Price Action: XPO shares closed lower by 4.31% at $84.95 on Tuesday.