Dive Brief:
- STG Logistics has acquired XPO Logistics' intermodal division for $710 million, the companies announced Friday, advancing XPO's spin-off plans revealed earlier this month.
- Approximately 700 employees and 48 locations have been transferred to STG in the transaction, according to an XPO news release. The former president of XPO's intermodal division, Paul Smith, will lead STG's intermodal operations.
- XPO's intermodal business, which provides rail brokerage and drayage services, generated $1.2 billion in revenue last year. The deal will allow STG to "expand our intermodal franchise as well as our scope of services in an aggressive way," Smith said in a statement.
Dive Insight:
XPO is one step closer to realizing its goal of spinning off its brokered transportation services from its North American LTL business, creating two pure-play companies. As part of the reorganization, XPO announced earlier this month it intended to divest its European business and North American intermodal operation.
"This divestiture simplifies our business model and moves our capital structure closer to investment-grade — two priorities in our strategic plan to unlock significantly more value for our stakeholders," Brad Jacobs, chairman and CEO of XPO Logistics, said in a statement.
XPO's intermodal division, formed through the company's purchase of Pacer International in 2014 and Bridge Terminal Transport in 2015, is the third-largest provider of containerized transportation services in North America, according to STG's news release. XPO's intermodal network features 2,200 tractors, 5,200 chassis and 11,000 containers, it added.
For STG, the deal will combine its facilities-based container logistics capabilities — which include container deconsolidation, reconsolidation, warehousing and transloading — with XPO Intermodal's container transport services, CEO Paul Svindland said in a statement. STG's facility network consists of 28 port locations, and the company has relationships with more than 65 inland partners providing "final mile access to all major metro areas," according to the release.
"Once combined, the STG network will be able to handle a container from the instant it's ready at a port or customer facility to the moment each individual shipment arrives at its final destination, all the while providing customers full visibility and a single source of accountability," Svindland said.
STG has more than quadrupled in size since 2016 through growth and acquisitions. It is expected to exceed $1.7 billion in revenue in 2022 and it "maintains an aggressive strategy for growth focused on transloading, warehouse solutions, fulfillment, and domestic intermodal services," said Konrad Salaber, managing director at private equity firm Wind Point Partners, in a statement. STG is a portfolio company of Wind Point.