XPO Logistics has announced its intention to spin off of 100% of its logistics segment as a separate publicly traded company. The spin-off will be structured as a tax-free transaction to XPO shareholders and will result in the shareholders owning stock in both companies.
Once the deal is finished, the entity named XPORemainCo will be a global LTL carrier as well as transport broker. Meanwhile, the second company, titled NewCo, will be a contract logistics provider.
In its official press statement, XPO Logistics said the change would result in „separate businesses with clearly delineated service offerings”:
XPO board currently believes that the optimal path to unlock aggregate equity value is to create two independent companies that are each well-equipped to capitalize on secular growth trends in their sectors. If completed, the spin-off will result in separate businesses with clearly delineated service offerings: XPORemainCo, a global provider of less-than-truckload (LTL) and truck brokerage transportation services; and NewCo, the second largest contract logistics provider in the world. Both companies are expected to trade on the New York Stock Exchange.
In addition, XPO stress that a lower debt profile with enhanced earnings potential will make it easier to achieve each company’s target of an investment-grade credit rating.
If the spin-off is completed as expected, XPO say that Jacobs shall remain as chairman and chief executive officer of XPORemainCo, and will also become chairman of the NewCo board. Troy Cooper will continue to serve as XPORemainCo’s president; and the executives currently leading XPO’s global logistics segment will continue to serve in senior positions with NewCo.
XPO believe the transaction will be completed in the second half of 2021, subject to a number of conditions. You can read XPO’s statement in full here.
According to Eric Chemi of CNBC, the move shall allow each of the separate businesses to specialise in their respective areas, while investors will be able to understand those businesses better at the same time.
Photo credit @ XPO UK