Dive Brief:
- XPO Logistics plans to spin off its brokered transportation services from its LTL business in North America, the company announced in a Tuesday afternoon news release.
- The move would make XPO a pure-play LTL and create a separate pure-play brokerage, which is expected to be headquartered in Charlotte, North Carolina. "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," said Brad Jacobs, XPO Logistics chairman and CEO, in the announcement.
- XPO also intends to divest its European business and North American intermodal operation as part of the reorganization, the company said.
Dive Insight:
Jacobs did not wait very long to make new corporate plans for the LTL giant after spinning off its European-centered warehousing business – now known as GXO – last August. That likely means he sees an opportunity to create more shareholder value.
The goal is always shareholder value, Jacobs is known to tell XPO and GXO executives. And one thing that has flustered Jacobs, the founder of United Waste Systems and United Rentals, has been what an analyst called a "conglomerate discount" that Wall Street traded XPO stock at. Jacobs soon decided the company had so many logistics facets that Wall Street traded it at less than its true worth.
Jacobs has also said that XPO’s LTL for-hire carrier company was trading below its "pure-play" competitors.
Jacobs wanted to split the warehousing and European logistics company from XPO’s main LTL business, but the pandemic delayed his plans. As 2021 progressed, Jacobs and XPO proceeded with the GXO spinoff plans, which created a new publicly traded company from a part of XPO. Jacobs remains as executive chairman of GXO.
His latest plan is to keep XPO as an asset-heavy basis for the remaining company, one that focuses even more heavily on "pure-play" LTL trucking. And the new company will offer investors an opportunity to invest in a U.S.-centered, more asset-light side of the logistics and trucking sector: intermodal, brokerage and managed transportation.
It’s not clear yet what either company will be named.
