Thursday, March 18, 2021

Planned Separation of Major Supply Chain Provider Into Two Logistics and Transport Companies

US Headquartered Outfit Looks to Split its Business Up
Shipping News Feature

US – WORLDWIDE – The break-up of XPO Logistics into two separate entities took a step forward this week when a new company name was announced. Somewhat confusingly given the parent company's title, the actual logistics business will soon fall under the auspices of the new outfit, GXO Logistics, Inc.

Transportation will seemingly remain with the original XPO brand while the new company is launched on the market with the tagline ‘Logistics at full potential’. A short video (HERE) has been produced to introduce GXO to interested parties and potential shareholders. Brad Jacobs, chairman and chief executive officer of XPO Logistics, said:

“Today, we took an exciting step forward on our path to spinning off our logistics segment. The new company is called GXO, three letters that stand for the game-changing opportunities we’re bringing to the table for customers, employees and shareholders, with a nod to our XPO heritage. GXO will take this legacy into the future as an independent public company, with countless ways to deliver logistics at full potential.”

Fuelled by years of investment in technology as part of XPO, GXO is claiming it will be in a strong position to capitalise on the logistics industry’s ‘predominant secular tailwinds’, i.e. the growth in e-commerce and omnichannel retail, fast-growing customer demand for automation and digital capabilities, and a shift toward outsourcing supply chain services.

The GXO brand is intended to have an ‘undiluted focus on its strategic priorities and blue-chip customer base’, with a standalone equity currency to create long-term value for its stakeholders. Malcolm Wilson, XPO’s chief executive officer - Europe, has been named to become CEO of GXO and he observed:

“The new company’s brand identity captures the qualities that make us an industry leader, our ability to deliver faster, leaner, smarter logistics for customers at lower cost, using advanced automation and data science. I’m looking forward to leading our global team to the many new opportunities in our future.”

Post-separation, XPO will remain a global provider of freight transportation, primarily less-than-truckload and truck brokerage, while GXO says it will be the second largest contract logistics provider in the world. Usage of the new company name, logo and other brand components will become effective upon the completion of the spin-off.

XPO has retained Goldman Sachs & Co. LLC as its financial advisor and Wachtell, Lipton, Rosen & Katz as its legal advisor to assist with the spin-off process. It has now filed a confidential initial Form 10 registration statement with the US Securities and Exchange Commission for the planned split. The filing represents another significant milestone in the process required to complete the transaction, which the company continues to expect will take place in the second half of 2021.

At this stage the transaction is subject to various conditions, including the effectiveness of the 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.

Photo: XPO has spent big on automating its logistics services.