XPO Logistics (NYSE:XPO) announced after the closing bell Tuesday it will become solely a trucking company, spinning off its high-tech truck brokerage business into a separate publicly traded firm.
“This is one great company becoming two great companies.” XPO CEO Brad Jacobs told the media. “There’s a large universe of investors who want to invest in a pure-play like LTL [less-than-truckload trucking] that’s asset-based with a high return on capital and levered to the ongoing industrial recovery.”
The remaining trucking business will retain current management including Jacobs, the ticker symbol XPO and headquarters in Greenwich, Connecticut. XPO will focus solely on LTL, where the company gets 33% of revenue.
LTL trucking, which allows multiple customers to ship goods in the same truck, has become increasingly in demand during the global supply chain disruption caused by the Covid pandemic as full truckload capacity has become more expensive and difficult for companies to find.
“We’ve managed the LTL business very well. We generated over $3 billion in net cash and improved margin by 910 bps since we bought the business. It’s going to be even more focused post-spin,” Jacobs said.
The truck brokerage business — which includes last mile delivery, freight forwarding and managed transportation — is expected to begin trading under a new name by the end of 2022. It will have a separate management team, with headquarters in Charlotte, North Carolina.
XPO shares hurtled higher $8.35, or 13.5%, to $70.28.