XPO Triumphs in 870M Dollar: In a significant development, XPO Inc (XPO.N), a leading trucking company, successfully secured a bid to acquire 28 service centers of the bankrupt Yellow Corp for $870 million. This move follows a closely watched auction of the assets of the nearly century-old firm, which filed for Chapter 11 bankruptcy protection in August, citing challenges attributed to the International Brotherhood of Teamsters union.
XPO’s shares experienced a 3.8% decline in morning trade, reflecting broader market weaknesses. Yellow Corp, formerly YRC, was a significant U.S. less-than-truckload carrier with 12,000 trucks and 35,000 trailers. Walmart (WMT.N) and Home Depot were among its customers.
The deal’s success, pending court approval, is anticipated to contribute to XPO’s core profit in 2024 and adjusted profit per share from continuing operations starting in 2025, according to a filing on Tuesday. Analyst Jonathan Chappell of Evercore ISI highlighted that the acquisition would provide XPO with a substantial footprint in areas where it previously faced capacity constraints, aligning with the company’s 2027 goals.
Also Read: Rescuing Yellow Corp: A Last-Ditch Bid to Save 30,000 Jobs”
To facilitate the acquisition, XPO has entered into an $870 million credit agreement, earmarked for optimizing routes within its less-than-truckload transportation operations in North America. The broader auction process involved nearly two dozen companies, including Estes Express Lines and Knight-Swift Transportation Holdings (KNX.N), collectively acquiring Yellow’s assets for $1.88 billion, as outlined in a court filing on Monday. The U.S. Bankruptcy Court in Delaware is set to review and potentially approve the bids in a hearing scheduled for Dec. 12.
Yellow Corp’s bankruptcy proceedings garnered significant attention, with concerns about potential losses for U.S. taxpayers stemming from a government rescue in the wake of the company’s downfall. This development underscores the evolving landscape of the trucking industry and the strategic moves made by companies like XPO to enhance their market presence.