Transportation & Logistics Company XPO Wins Bid To Acquire 28 Service Centers Of Bankrupt Yellow Corp., Sees EPS Accretion
Portfolio Pulse from Lekha Gupta
XPO Inc (NYSE:XPO) won an auction to acquire 28 service centers from the bankrupt Yellow Corporation for approximately $870 million. The deal, which includes the assumption of three asset leases, aligns with XPO's LTL 2.0 growth plan and is expected to be accretive to adjusted EBITDA and dilutive to adjusted EPS in 2024, turning accretive to adjusted diluted EPS from 2025. As of Q3, XPO had $335 million in cash and equivalents. Despite a soft freight market, XPO's November operating metrics showed a slight decrease in LTL tonnage per day, but a rise in shipments per day and yield ex-fuel growth ahead of expectations.
December 06, 2023 | 10:37 am
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POSITIVE IMPACT
XPO Inc's acquisition of Yellow Corp's service centers for $870M is expected to be accretive to EBITDA and EPS from 2025, indicating a strategic expansion despite a soft freight market.
The acquisition is a significant strategic move for XPO, indicating a positive outlook for the company's growth and financial performance in the medium term. The expected accretion to EBITDA and EPS from 2025 suggests a positive impact on the stock price, although the dilutive effect on adjusted EPS in 2024 could temper short-term enthusiasm. The company's solid November operating metrics, despite a soft freight market, further support a positive short-term impact.
CONFIDENCE 90
IMPORTANCE 85
RELEVANCE 100