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Home » XPO's Asian growth to be fueled by joint ventures, not mergers, Jacobs says
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XPO's Asian growth to be fueled by joint ventures, not mergers, Jacobs says

August 2, 2017
Mark B. Solomon
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Should XPO Logistics Inc. expand into Asia, it will likely be through a joint venture rather than an acquisition, the company's chairman and CEO said today.

Bradley S. Jacobs said in a phone interview that he'd rather see Greenwich, Conn.-based XPO grow its Asian business organically with an established partner instead of the company buying its way in. Jacobs said XPO's portfolio, supported by its technology capabilities, would be a good fit for Asia, which boasts an aggregate population of around 4 billion people and is home to some of the world's fastest-growing economies and companies. However, the company will focus future acquisition efforts on North America and Western Europe, he said.

Jacobs confirmed that, after nearly a two-year hiatus as it integrated the acquisitions of U.S. transport and logistics firm Con-way Inc. and French company Norbert Dentressangle S.A., XPO is back in the mergers and acquisitions hunt. The company has examined about 200 potential candidates and winnowed the number down to a few dozen. It is in discussions with potential merger partners for which the potential price tag would be in the hundreds of millions of dollars, Jacobs said. However, any deal in the multi-billion dollar range is still at least a few months off, he said.

Earlier this month, XPO said it would issue 11 million shares of common stock, the proceeds of which could be used for what it termed "strategic acquisitions."

Jacobs' comments came as XPO reported second-quarter revenue; net income; and earnings before interest, taxes, depreciation, and amortization (EBITDA) that were all company records. Revenue totaled $3.76 billion, compared with $3.68 billion for the same period in 2016. Revenue increased year over year by $210.4 million, a figure that excluded the second-quarter 2016 revenue from its North American truckload unit, which was sold last October.

Net income totaled $47.6 million, compared with net income of $42.6 million for the same period in 2016.

XPO closed $1.4 billion in new business in the first half of the year, a 62-percent increase over the first half of 2016, which was a period of weakness in the transport sector. The company expects 6-percent organic revenue growth for 2017 compared to 2016 levels. Its North American less-than-truckload (LTL) operation posted a quarterly operating ratio—revenues over expenses—of 84.6 percent, its best ratio in at least two decades, the company said.

In the phone interview, Jacobs spoke glowingly about the results. "It was a stunning quarter," he said.

Transportation Trucking Less-than-Truckload
KEYWORDS Select Carriers XPO Logistics
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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.

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