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

XPO Logistics Inc (NYSE: 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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