XPO Logistics announced that it had completed the sale of its North American intermodal business to STG Logistics for $710 million in cash considerations, following a competitive sales process with multiple bidders, according to an XPO release.
The divestiture announced on March 25 follows the XPO board’s move earlier this month to separate its tech-enabled brokered transportation services from its less-than-truckload (LTL) business in North America. At that time, XPO also previewed the sale of the intermodal business and its intention to also divest itself of its European business.
See also: XPO splits business into LTL, brokerage companies
This divesture of the intermodal unit to STG is a "key step in XPO's strategic plan" to create two pure-play, publicly traded companies representing the less-than-truckload and truck brokerage businesses and achieve an investment-grade credit rating, according to the XPO release.
The intermodal unit, which XPO has reported as part of its brokerage and other services segment, generated $1.2 billion in revenue in 2021, according to XPO. The divested intermodal operations provide rail brokerage and drayage services, and the unit’s 48 locations and 700 employees have transferred to STG Logistics in the transaction announced Friday.
“This divestiture simplifies our business model and moves our capital structure closer to investment-grade—two priorities in our strategic plan to unlock significantly more value for our stakeholders,” said Brad Jacobs, XPO’s chairman and CEO. “We’ve completed a key step in preparing for our planned spinoff, when we’ll separate XPO into two publicly traded leaders in less-than-truckload transportation and tech-enabled brokered transportation services.”
XPO will be the third-largest less-than-truckload provider in North America and one of only a few national networks. The XPO intermodal division acquired by STG is North America’s third largest provider of containerized transportation services, providing intermodal drayage and rail brokerage services for retailers, manufacturers, third-party logistics providers (3PLs), and other types of customers. The network includes 48 locations, 11,000 containers, 2,200 tractors, and 5,200 chassis. The division was formed through XPO’s purchase of Pacer in 2014 and Bridge Terminal Transport in 2015.
As a standalone entity, intermodal can be valued as a pure-play business and, under the new ownership’s focus, it will be able to grow even faster, said Tara Mullins, XPO’s public relations director. “We learned from the GXO spin (split off from XPO in December 2020) that when you have companies that are more focused and fit for purpose with a management team doing one thing, you can drive outsized growth,” Mullins said.
STG Logistics CEO Paul Svindland and STG President and CFO Geoff Anderman will continue to lead the company. Current COO Todd Larson will lead the legacy STG operations as executive VP of STG and COO of STG’s distribution segment, and Paul Smith, formerly president of XPO’s intermodal division, will lead STG’s intermodal operations as EVP of STG and COO of STG Intermodal, according to a separate release from STG about the $710 million purchase from XPO.
“We are combining STG’s leading position in facility-based container logistics with XPO Intermodal’s leading position in container transport, creating a platform with unparalleled capabilities,” Svindland said in STG’s release. “Once combined, the STG network will be able to handle a container from the instant it’s ready at a port or customer facility to the moment each individual shipment arrives at its final destination, all the while providing customers full visibility and a single source of accountability.”
STG is a provider of facilities-based containerized logistics services, including container deconsolidation, reconsolidation, transloading, warehousing, and outsourced transportation solutions, including final-mile delivery.
STG operates a U.S. facility network made up of 28 port locations totaling more than 5 million square feet and maintains relationships with more than 65 inland partners that enable final-mile access to all major metropolitan areas. Since Wind Point’s investment in 2016, STG has more than quadrupled in size through organic growth and 10 add-on acquisitions.
