The break-up of XPO Logistics seems to be very much back on. Delayed by the effects of the COVID-19 crisis, the sale of at least parts of XPO Logistics resumed in October according to press reports, although XPO itself has not made any statement confirming this.
It seems that the European operations are closest to being sold, with a number of prominent private equity companies expressing interest to the management of XPO. Further press reports this week (w/c November 23) now suggest that that the largest and most prominent of these, Blackstone Group, has withdrawn from the negotiations, supposedly due to disagreements over the value of the business.
A report on the news site Bloomberg suggested that XPO had asked for a sale price of $4.5bn for what it calls the “European Supply Chain Business”, a price that Blackstone Group rejected.
It is unclear what this “European Supply Chain Business” includes, as XPO in Europe has both contract logistics and road freight operations that are related but distinct. The total European transport business had revenue of $1.8bn for the nine months until the end of September whilst ‘Logistics’ – which is contract logistics and related warehousing – had revenue $2.7bn for the same period.
XPO’s European business is largely based around the former Norbert Dentressangle S.A. which XPO bought in 2015 for €3.2bn, or roughly $1bn less than what Bradley Jacobs, XPO’s CEO and founder, is now asking Blackstone Group for.
Both sides are experienced negotiators, with Bradley Jacobs, in particular, having a long record of buying and selling companies. Therefore, caution should be exercised over what the outcome of the deal-making will be. There are suggestions that XPO could consider floating the European business on a stock market and it certainly would be large enough. Alternatively, XPO Logistics could choose to retain the business. However, there are many private equity businesses hungry for a deal and Bradley Jacobs has clearly indicated that he thinks prices for companies are rather high, so this seems the most likely destination.
Source: Transport Intelligence, November 26, 2020.
Author: Thomas Cullen