- XPO is planning to spin-off its freight brokerage unit from its less-than-truckload operations
- XPO’s intermodal segment is the third-largest provider of containerized transportation services in North America, providing intermodal drayage and rail brokerage
- STG Logistics is to acquire XPO’s intermodal arm for 710 million USD
A costly contract
The sale is part of XPO’s plans to spin-off its freight brokerage unit from its less-than-truckload operations. In addition, the company has proposed a plan to sell or IPO of the European branch
“This divestiture simplifies our business model and moves our capital structure closer to investment-grade, which are two priorities in our strategic plan to unlock significantly more value for our stakeholders”, Brad Jacobs, chairman and CEO of XPO Logistics, said.
“We’ve completed a key step in preparing for our planned spin-off when we’ll separate XPO into two publicly traded leaders in less-than-truckload transport and tech-enabled brokered transport services,” he explained.
According to the terms of the contract, the sale to STG Logistics is “subject to a customary post-closing purchase price adjustment”.
The transaction also sheds light on the value of XPO’s European operations, which may be valued between 800 million and 1.3 billion USD in the event of a sale or IPO.
How large is the intermodal arm of XPO?
In 2021, XPO’s intermodal division generated 1.2 billion USD in revenue as it provided rail brokerage and drayage services at 48 locations with an estimated 700 employees. Those employees are expected to join STG Logistics as part of the sale.
STG Logistics is familiar with the intermodal business because its CEO, Paul Svindland, was the chief operating officer of Pacer International when it was purchased by XPO Logistics in 2014 for 335 million USD and rebranded as XPO’s intermodal division.
Nowadays, XPO’s intermodal segment is the third-largest provider of containerized transportation services in North America, providing intermodal drayage and rail brokerage to retailers, manufacturers, third-party logistics providers, and other clients. The operations include 48 XPO stations, 2,200 tractors, and 5,200 chassis in the XPO network. Pacer and Bridge Terminal Transport were purchased by XPO in 2014 and 2015, respectively, to establish the division.
Tran Van Hieu