Reports: XPO Renews Push to Sell European Unit

XPO Logistics has reportedly restarted its efforts to sell its European transportation unit, according to a recent Bloomberg report. This move aligns with the company's ongoing strategy to streamline its operations and focus on its core business.

Key Points:

Sale Resumption: XPO has renewed its attempt to sell its European transportation business, a plan initially paused in late 2022 due to weakening European capital markets.

Potential Value: The European unit could potentially fetch around $2 billion, based on industry estimates.

Financial Performance: For the 12-month period ending June 30, the European unit generated:

• Revenue: $3.1 billion
• Adjusted EBITDA: $167 million

Business Overview: XPO's European operations offer a range of services, including:

• Dedicated truckload
• Less-than-truckload (LTL)
• Truck brokerage
• Managed transportation
• Last-mile delivery
• Freight forwarding

XPO's Recent Performance:

• XPO's stock has seen a 33% rise this year, attributed to its strategic focus on less-than-truckload (LTL) services.
• In Q2 2024, XPO generated $2.08 billion in revenue, an 8% increase from $1.92 billion in Q2 2023, meeting analyst expectations.

Industry Context:

The potential sale of XPO's European unit follows a similar move by competitor C.H. Robinson:

• C.H. Robinson recently sold its European ground assets (European Surface Transportation) to Sennder Technologies, a German-based freight forwarder.
• This industry trend suggests a shift among some major U.S. logistics companies towards consolidating their operations and focusing on core markets.

Background:

This potential sale is part of XPO's broader strategy initiated in late 2020 to break up its conglomerate structure. Previous actions in this plan included:

• 2021: Spin-off of contract logistics business GXO
• 2022: Sale of intermodal unit and spin-off of brokerage business RXO

If successful, the sale of the European unit would complete XPO's transformation into a pure-play, less-than-truckload carrier.

Sources: Bloomberg | FreightWaves