We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • ::COVID-19 COVERAGE::
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Dispatches
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Dispatches
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
Home » XPO gets $700 million equity infusion from two Canadian pension funds, one in Singapore
newsworthy

XPO gets $700 million equity infusion from two Canadian pension funds, one in Singapore

September 12, 2014
Mark B. Solomon
No Comments

XPO Logistics Inc. said late yesterday it will receive a $700 million capital infusion from two Canadian pension funds and a sovereign wealth fund in Singapore and will use the proceeds to finance what could be a significant acquisitions spree over the next 18 months.

Greenwich, Conn.-based XPO also raised its revenue and income targets for 2017. XPO now plans to generate about $9 billion in annualized revenue by that time, up from the prior target of $7.5 billion. It now expects to report $575 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2017—up from $425 million projected previously. XPO revised its targets because the company now has significantly more liquidity to execute accretive acquisitions, Bradley S. Jacobs, XPO's founder, chairman, and CEO, said in a phone interview today.

The new investors are GIC, Singapore's fourth largest sovereign wealth fund; PSP Investments, a Montreal-based pension fund that invests on behalf of the country's civil servants and the Royal Canadian Mounted Police, among others; and the Ontario Teachers' Pension Plan, which invests for approximately 400,000 teachers in the province. Under the arrangement, the entities will buy XPO shares priced at $30.66 a share, a 5-percent discount from the average share price calculated over the prior 20 trading days dating back from yesterday. XPO will gain access to the funds on Sept. 17.

The combined entities will control approximately 22 percent of XPO stock. Jacobs Private Equity LLC, a corporation controlled by Jacobs and his wife, will remain XPO's largest shareholder with a reported 24-percent stake. Jacobs declined to disclose the amount of each firm's investment.

After deducting about $10 million in expenses, the infusion will leave XPO, a third party provider that operates in freight brokerage, expedited transportation, last-mile delivery, and freight forwarding, about $690 million to spend, Jacobs said. Currently, XPO has about $300 million of liquidity in cash, cash equivalents, and access to lines of credit based on the value of certain assets, Jacobs said. In addition, XPO can leverage the new investments to generate additional borrowing capabilities. In all, XPO will have more than $1 billion available for acquisitions.

Jacobs said that the "acquisition pipeline is very active" at this time and that it shows little signs of slackening. XPO is exploring opportunities across its four main businesses, Jacobs said. It has no plans to expand into segments of transportation and logistics that it is not already involved in, he added. He said that 2015 will be a busy year for XPO on the acquisition front.

Discussions with the new investors began only a few weeks ago after XPO told its investment adviser, Morgan Stanley & Co., that it was interested in additional capital to take advantage of a myriad of acquisition opportunities available to it, Jacobs said. XPO would not be short of capital if the investments didn't happen, Jacobs said. However, the new capital infusion "gives us a lot of firepower," he added.

John G. Larkin, lead transportation analyst for Stifel, Nicolaus & Co., said in a research note today that he wouldn't be surprised if XPO made a play for a large, privately held brokerage firm, especially since the company has in the past year moved away from acquisitions in brokerage, which remains its core business. Larkin added that the company has expressed interest in adding heft to the "last-mile" delivery market following its July 2013 purchase of 3PD Inc., the biggest provider of delivery services. Last-mile providers typically deliver heavier weighted goods such as appliances and desks from distribution centers and stores to residences, businesses, and job sites.

When he formed XPO in 2011, Jacobs said he would primarily pursue acquisitions of truck brokers in an effort to consolidate a large but fragmented market. In the past year or so, XPO has shifted its acquisition focus to companies like 3PD; intermodal service provider Pacer International; and, most recently, New Breed Holding Co., a leading contract logistics provider, which XPO acquired for $615 million in cash, its largest deal to date. Jacobs said the recent moves are designed to round out XPO's product offerings and to synchronize multiple components of the logistics business under a single company.

Jacobs said in a later email that he had not read Larkin's note and couldn't comment on specifics. "We are talking to lots of people in all our verticals," Jacobs said. The analyst said he had no knowledge of any pending deals involving XPO.

Following the news of the capital infusion, Larkin raised his 12-month target price on XPO to $45 a share from $37 a share. Shortly past the mid-point of today's New York Stock Exchange session, XPO stock was up $3.73 a share to $37.78. Earlier in the session, the stock had touched a new 52-week high of $39.28 a share.

Transportation Transportation 3PL Procurement Agents
KEYWORDS 3PD Pacer International Stifel Nicolaus & Co. XPO Logistics
  • Related Articles

    XPO buys Canadian broker for $8 million in cash

    XPO says software pilot projects could generate $100 million profit in two years

    XPO on track to save $300 million over next two years, executive says

Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

Recent Articles by Mark Solomon

Coming together for road safety: interview with Joshua Girard

Off the rails

Freight rate spikes shaking up the C-suite

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Relaxed regulations for drone parcel delivery to take effect in March

  • IBM survey says digitalization trends will sweep trucking industry by 2030

  • Gartner survey signals increased investment in resilience over the next two years

  • What Level of Automation is Right for Your Warehouse?

  • Old Dominion adds nine freight service centers to handle business growth

Now Playing on DCV-TV

D92f0dd1 a98c 434a 9e17 30b63ee72c90

Automated Pack-out and Print-Apply System for thredUP

DCV-TV 4: Viewer Contributed
SilMan Industries designed and implemented a mixed polybag-carton system, including automated print and apply, in a new regional Fulfillment Center for thredUP, one of the world’s largest online resale platforms for women’s and kids’ apparel, shoes, and accessories. The Situation Secondhand clothing and online...

FEATURED WHITE PAPERS

  • Time to rethink your lift truck power

  • Warehouse Management System Project Toolkit

  • Solving Talent Management Challenges Now and In the Future

  • Shaping Up Last Mile Delivery to Surpass Customer Expectations

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2021. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing