XPO ups the ante with investment partners

Non asset-based 3PL XPO Logistics has upped its equitable ante, announcing today it has entered into definitive agreements to raise $1.26 billion through entering into definitive agreements with the Ontario Teachers’ Pension Plan, GIC-Singapore’s sovereign wealth fund, and Public Sector Pension Investment board, with the net proceeds to be used by XPO to fund its ongoing growth strategy, the company said.

Last September, that aforementioned investor trio made an initial investment of $700 million into XPO, with today’s news signaling they have increased their respective holdings in XPO while being joined by 12 institutional investors that includes sovereign and university endowment funds. XPO said it will take these net proceeds along with cash on hand and debt financing it announced in a separate announcement today to fund its recently-announced acquisition of Lyon, France-based global 3PL Norbert Dentressangle SA and other acquisitions.

“We’re delighted to deepen our relationships with several of our largest shareholders and also welcome new blue chip investors to XPO,” said XPO Chairman and CEO Brad Jacobs in a statement. “We appreciate this endorsement of our growth strategy, which is still in its early innings.”

Growth through acquisition has been and remains a major strategy for XPO, since it entered the market in 2011, when Jacobs and his firm Jacobs Private Equity LLC and a group of investors made a $150 million commitment into Express-1 Expedited Solutions, a non-asset-based third party logistics transportation provider, and subsequently re-named the company XPO Logistics, in mid-2011.

Some of its most notable acquisitions include:  a $615 million acquisition of Value-Added Warehousing & Distribution (VAWD) 3PL New Breed in June 2014; a $335 million acquisition of Pacer International in April 2014; and an August 2013 acquisition of 3PD Inc., among others. 

In a previous interview with LM, Jacobs said that XPO is consistently vetting companies as acquisition targets for future growth, noting that it is particularly interested in ones that are highly scalable.

Last month, XPO reported first quarter 2015 earnings, with total gross revenue seeing a 148.9 percent annual gain at $703.0 million and net revenue up 349.0 percent to $262.2 million.

XPO said in that earnings release it has raised its 2015 annual run rate revenue target to a minimum of $9.5 billion and an annual EBITDA run rate of at least $625 million by December 31, which is more than double what it was in February.

Senior notes offering: XPO also announced today that it intends to issue $2.0 billion in Senior Notes, which it said are expected to be issued in up to four tranches that may include U.S. dollar-denominated senior notes due in 2022, euro-denominated fixed rate senior notes due 2021, euro-denominated floating rate senior notes due in 2020, and pounds sterling-denominated senior notes due in 2020.

XPO also said today it has officially completed its previously announced acquisition of Bridge Terminal Transport (BTT), an asset-light drayage provide for $100 million.
BTT arranges ground transportation through its 28-terminal network made up of about 1,300 independent owner-operators and has about 250 employees and 1,800 customers, including several multinational shippers, with XPO noting it expects this deal to expand its East Coast drayage capacity.

“BTT is an extremely well-run and well-managed drayage company and are one of the largest pure-play, asset-light drayage providers in the U.S.,” Jacobs said.  “Most, but not all, of their footprint is on the East Coast, and they have a lot of customer loyalty, with its top ten customers having done business with BTT for 19 years on average.”