XPO CEO: More acquisitions possible once spinoff is complete

Dive Brief:

Bradley Jacobs, XPO Logistics CEO, told a webinar audience on Monday that he is open to acquiring new companies once the existing XPO model is split into two parts. The company plans to split into a "pure play" LTL company and a logistics company.
"We expect to grow both organically and inorganically, through acquisitions in both of the companies — the transportation company and the contract logistics company," Jacobs said when asked about XPO's dual future. XPO announced in December that it will split into two separate entities, a move to be finalized in the second half of 2021.
The remarks indicate Jacobs, a longtime investor and M&A expert, has not dropped his plans to make acquisitions simply because XPO is splitting into two parts. Jacobs made the remarks during the SMC3 Jump Start 2021, an annual conference held online this year because of COVID-19.

Dive Insight:

Jacobs started 2020 eager to make more acquisitions and obtain value for shareholders. But he told investors in early March that he had to cancel plans because of the COVID-19 pandemic.

Still, Jacobs did not stop planning. In early December, he surprised the industry with plans to split XPO into two.

XPO has five segments. One is its LTL business. The second and third segments are North American and European transportation segments. Those three segments will remain in the core company, and make up about 64% of the present company. The fourth and fifth segments are the U.S. and European contractual logistics businesses.

Jacobs turned XPO into a trucking powerhouse over the years by growing the LTL company organically and through absorbing other firms.

He began making transportation-related acquisitions in 2011, buying a company that had the ticker symbol "XPO." Jacobs later named the entire company after that symbol. His $3 billion purchase of Con-way in 2015 made XPO the second-largest LTL company at the time.

Jacobs told a webinar audience he sees big opportunities for LTL companies, claiming the long-term trend for LTL will be to grow profitability, using technology to make sure the trucks are effectively using time.

Analysts expect a banner year for M&A in the trucking industry, following pent-up demand that accrued during the pandemic. Some trucking firms may target specific sectors that the pandemic boosted demand for, such as J.B. Hunt seeking last-mile acquisitions. Jacobs did not hint at what types of firms he anticipates XPO's remaining or new company will acquire.