The Clap
Transporter of bulk goods XPO Logistics (NYSE: XPO) announced it would spin off its truck brokerage business from its own trucking business.
A truck broker is a middle entity that facilitates the deal between a shipper & a carrier for the delivery of the shipper’s goods.
Why the spin-off?
Investors. According to XPO’s CEO, some investors are increasingly looking for investments that are purely “asset-based with a high return on capital, & levered to the ongoing industrial recovery.”
While other investors are looking for a purely “asset-light, tech-enabled truck brokerage platform” investment.
Why this matters
Shares of XPO jumped in extended trading after the announcement was made, & the jump could be attributed to XPO’s previous successful experience with spin-offs.
About a year ago, XPO spun off its contract logistics business into another publicly-traded company GXO Logistics (NYSE: GXO). GXO shares gained 17% since then, with XPO’s CEO giving credit to the strategy of having management teams focusing on one business.
Details of the spin-off haven’t been revealed, but XPO has tapped Bank of America Securities, Morgan Stanley, & Goldman Sachs to advise on the spin-off.
