Chief Operating Officer, XPO INC
XPO Logistics open to spinning off up to four business units: CEO
XPO Logistics CEO Bradley Jacobs told "Mad Money" host Jim Cramer the company is looking to unlock value by breaking up the ...
About David Bates
In September 2020, XPO Logistics CEO Bradley Jacobs stated that the company was considering spinning off or selling up to four of its business units. Jacobs said the company's stock had performed well but was receiving a low valuation multiple as a diversified company, and that separating the units into smaller pure-play businesses could create more value. He specified that the company was not marketing its less-than-truckload (LTL) unit or the entire company, but was instead marketing its North American and European transportation and logistics businesses. Jacobs described the proactive process of holding auctions for each of the four units as the best way to create value in the stock.
Transcript (4 segments)
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Interviewer0:00
All right, Brad. People made fortunes with your stock. I mean, it's up more than tenfold since your investment in 2011. Why now? And does it necessarily mean that you're done?
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David Bates0:11
No, oh, we're not done. So first of all, thanks for having me on. So the company, the stock has performed very well. It was the seventh best performing stock of the Fortune 500 of the last decade. But we're still getting a low multiple. So as a diversified company, the market's only giving us an eight or nine times multiple. When you look at what we would get if we sold off or spun the four of our business units, each one of those as a smaller pure-play would get a higher multiple. So when you do the math objectively, it creates more value by spinning off or selling those four business units. Now, we're not interested in selling LTL. We're not marketing LTL, and we're not marketing the whole company. We're marketing those four businesses: North American and Europe transportation and logistics.
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Interviewer1:07
Well, my feeling, Brad, is that somebody else has put pen to paper, a large company, and said, 'Hey Brad, I'll buy your company for, I don't know, seven billion. I'll pay it by ten, eleven billion.' Have you been contacted by someone who's large?
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David Bates1:21
Well, I want to comment on those kind of discussions, but what we're doing proactively, I think, is the best way to create a significant amount of value in the stock, holding auctions and going through a professional process for each one of those four business units.