XPO jumps most since August after CEO seeks to break up company

XPO Logistics Inc. jumped the most in five months after the trucking and warehouse operator said it’s considering the possible sale or spinoff of four of its business units.

The company plans to keep its U.S.-based short-haul trucking operations and put up for sale two units in North America and two in Europe. It’s hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to explore possible transactions.

“We’re going to be a pure play. Wall Street understands pure play,” Chief Executive Officer Brad Jacobs said in a Bloomberg TV interview Thursday. “We’ll have no net debt and we’ll have billions of dollars of cash in a publicly traded entity.”

Jacobs is frustrated by his company’s valuation, which has been trading at about 8 to 9 times earnings before interest, taxes, depreciation and amortization. That trails competitor Old Dominion Freight Line Inc., which trades at 13 times.

The “conglomerate discount” the market has put on XPO has persisted even as the company increased revenue by $2 billion and Ebitda by $500 million in the last four years without acquisitions.

Shares rose 13% to $93.57 in New York at 10:15 a.m., the biggest intraday increase since August 2. Last year, XPO rose 40% while the Standard & Poor’s 500 Index increased 29%.

No Guarantee

Jacobs said it’s not guaranteed that the business will be sold.

“Right now is a good time,” he said. “The credit markets are good. M&A market is good. We’ll run the processes, and if we get attractive prices, we’ll sell them.”

XPO itself is a rollup. It’s announced 19 deals worth $7.5 billion since Jacobs took over the company in 2011, when it was called Express-1 Expedited Solutions. Its shares have gained 584% since Jacobs took the reins.

Jacobs is a zealous dealmaker who has done more than 500 acquisitions, building four companies before XPO. That included construction equipment renter United Rentals Inc. and trash collector United Waste Systems Inc., which is now owned by Waste Management Inc.