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Why XPO Logistics Is ‘Exploring Options’ for Its Business Segments

XPO Logistics Inc., a major global provider of transportation and logistics solutions, said its board of directors has authorized a review of strategic alternatives, including the possible sale or spin-off of one or more business units.

“XPO is the seventh best-performing stock of the last decade on the Fortune 500, based on Bloomberg market data,” Bradley Jacobs, chairman and CEO of XPO Logistics, said. “The share price has increased more than tenfold since our investment in 2011. Still, we continue to trade at well below the sum of our parts and at a significant discount to our pure-play peers.

“That’s why we believe the best way to continue to maximize shareholder value is to explore our options, while remaining intensely committed to the satisfaction of our customers and employees,” Jacobs said.

On Thursday morning, following its announcement on Wednesday, the company’s stock was trading at $93.23, up $10.41 on the New York Stock Exchange. A year ago, it was trading at $60.61.

In the third quarter ended Sept. 30, XPO Logistics reported revenue decreased 4.38 percent to $4.15 billion from $4.34 billion for the same period in 2018. Net income rose 15.84 percent to $117 million compared with $101 million a year earlier.

In making the announcement, XPO noted that there can be no assurance of any specific outcome. The company has not set a timetable for completion of the review process and has not determined which, if any, business units would be sold or spun off. However, the company does not intend to sell or spin off its North American less-than-truckload unit used by many retailers and B2B companies.

XPO has retained Goldman Sachs & Co. and J.P. Morgan Securities as its financial advisors and Wachtell, Lipton, Rosen & Katz as its legal advisor to assist with the review process.

The company has two reporting segments: transportation and logistics, each diversified in geographies, verticals and types of service. In the logistics segment, XPO provides a range of supply chain services, including e-commerce fulfillment, reverse logistics, factory and aftermarket support, packaging and labeling, distribution and managed transportation.

The transportation segment offers truckload, freight brokerage, last mile, expedite, intermodal, drayage, less-than-truckload and global forwarding services.

The company’s investment statement said the potential for growth is strong, with “a $1 trillion addressable opportunity, of which we hold less than 2 percent market share.” The company handles an average of 160,000 shipments and more than 7 billion inventory units daily.