XPO Logistics to Split Company Into Two And Divest These Units To Unlock Value For Investors

XPO Logistics Inc XPO said on Tuesday it plans to split its key North American business units into two publicly traded units and aims to divest its European business and North American intermodal operation, a move that it says will unlock value for investors.

What Happened: The trucking and freight brokerage company said the spinoff will help it focus on the less-than-truckload (LTL) business that caters to smaller shipments.

“We believe that by separating these businesses through a spin-off, we can significantly enhance value creation for our customers, employees and shareholders, as we did with our successful spin-off of GXO last year,” XPO Chairman and CEO Brad Jacobs said in a statement.

XPO said the planned spin-off is intended to be tax-free to shareholders and expects it to be completed in the fourth quarter of 2022. 

The Greenwich, Connecticut-based company also said its European business, which provides rail brokerage and drayage among other services, will be divested through either a sale or a listing on a European stock exchange. 

See Also: What 9 Analyst Ratings Have To Say About XPO Logistics

Why It Matters: XPO said its North American LTL unit would be the third-largest of its kind for domestic and cross-border services after the split. Last year, that unit generated $4.1 billion, while XPO's freight brokerage unit brought in $8.9 billion. 

 XPO said the sum of the stock prices of the two standalone businesses following the split would be higher than if they remained as a combined entity.

The move follows XPO’s strategic review to evaluate a possible sale or spinoff of one or more of its business units. Last year, the company separated its contract logistics business.

Price Action: XPO stock closed 2.75% higher at $61.9 a share on Tuesday and was up 10% in extended trading.

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