XPO Logistics to spin off logistics segment as separate public company

XPO Logistics announced that its board of directors has unanimously approved a plan to pursue a spin-off of 100% of its logistics segment as a separate publicly traded company. XPO intends to structure the spin-off as a transaction that is tax-free to XPO shareholders and would result in XPO shareholders owning stock in both companies. The company said the XPO board 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 delineated service offerings: XPORemainCo, a global provider of less-than-truckload, or LTL, and truck brokerage transportation services; and NewCo, a contract logistics provider. Both companies are expected to trade on the New York Stock Exchange. If the spin-off is completed as expected: Jacobs will continue to serve as chairman and CEO of XPORemainCo, and will 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. The transaction is currently expected to be completed in the second half of 2021, subject to various conditions, including the effectiveness of a Form 10 registration statement, receipt of a tax opinion from counsel, the refinancing of XPO's debt on terms satisfactory to the XPO board of directors, and final approval by the XPO board of directors. There can be no assurance that a separation transaction will occur or, if one does occur, of its terms or timing. XPO's views regarding the spin-off's potential impact on aggregate equity value are based, among other things, on a study of the valuation multiples assigned to its publicly traded peers that have more specialized business models. The company believes that, by simplifying the business model and strengthening the focus of each resulting company, a spin-off is the optimal way to unlock significant equity value not currently reflected in the existing conglomerate and thereby benefit both businesses and their stakeholders. Post-separation, XPORemainCo will be a provider of freight transportation, primarily LTL and non-asset truck brokerage, these two services currently account for approximately 90% of adjusted EBITDA. As of September 30, XPO had transportation operations in 17 countries, with approximately 38,000 employees and 724 locations. As of September 30, XPO had asset-light logistics operations in 27 countries, with approximately 58,000 employees and 766 locations.