Dive Brief:
- XPO informed the Securities and Exchange Commission on Friday that it was terminating its review of strategic alternatives, including the possible sale or spin-off of one or more of XPO’s business units.
- The SEC filing followed a Jan. 15 announcement in which CEO Brad Jacobs said he wanted to examine such sales after years of acquiring businesses and growing XPO into one of the largest LTL firms in North America.
- Jacobs' review of sales is the latest fallout from the spread of COVID-19 in North America and Europe, the two continents where XPO does business. XPO cited the current business climate in its SEC filing.
Dive Insight:
Jacobs' announcement that he would consider selling off parts was a sign the M&A market within the trucking sector was healthy. Jacobs also expressed dissatisfaction with his company's stock price, and longed to be a "pure play" LTL company.
Jacobs' January announcement was all the more surprising, as he told Morgan Stanley analysts in September 2019 that he was going to spend up to 15% of his time exploring possible acquisitions.
Some deals Jacobs had been discussing eventually went through, with XPO buying Kuehne + Nagel’s non-core logistics assets providing "inbound and outbound distribution, reverse logistics management and inventory management" services in the U.K.. The deal is expected to close in the second half of this year and both parties have agreed not to disclose transaction details.
But world events conspired against further plans. The COVID-19 outbreak is beginning to spread widely in the United States, with California and New York state governments asking employers to keep workers home, with some exceptions.
XPO's share price increased more than tenfold since 2011 but the CEO insisted XPO trades "at well below the sum of our parts," in his January announcement of the strategic review. Jacobs said he envisioned spinning off parts of XPO as a way to grow the company's core North American LTL business.
