Proving the Business Case for the Internet of Things

XPO Logistics pays $59m for UX Specialized Logistics

Reuters
February 18, 2015

Connecticut-basedXPO Logistics has bought home delivery company UX Specialized Logistics for $59m in cash to tap into the booming e-commerce market in North America. XPO estimates last kilometre delivery services, which involve transporting goods from warehouses to either a home or retailer, to be a $13bn market in North America.
 
"UX will boost our over-the-road capacity by another 1600 independent owner-operators," XPO chief executive Bradley Jacobs told Reuters. "That's important to our growth plan for last mile."
 
New York-based UX is a third-party logistics provider specialising in inventory management services and the installation of heavy goods apart from home delivery on the east coast and in Chicago and Canada. XPO is the largest non-asset provider of last kilometre-delivery services for heavy goods in the region.
 
Jacobs has built XPO into a one-stop shop logistics company since he took control in 2011, largely through acquisitions. The UX deal will significantly boost XPO's exposure to burgeoning US e-commerce sales, which are expected to nearly double to $434bn in 2017 from 2012, according to statistics web site Statista.
 
UX, founded in 1978 and formerly known as Urban Express, delivers over 930,000 packages annually. The company had revenue of $113.2m in 2014. The deal is expected to add to XPO's earnings immediately, Jacobs said, adding that almost all of the UX management team had joined XPO.
 
Analysts on average expect XPO's loss to narrow to 10 cents per share for the first quarter ending March 31 from 37 cents a year earlier, according to Thomson Reuters I/B/E/S. Revenue is expected to triple to $849.7m.
 
XPO had cash and equivalents of $680m as of September 30, 2014. The company raised $700m in September from a group of investors, including Ontario Teachers' Pension Plan and Singapore's sovereign fund, GIC, to spend on acquisitions.
 
XPO's stock has risen about 51 per cent in the past 52 weeks and has vastly outperformed that of rival Expeditors International of Washington, which has gained 9 per cent. UTi Worldwide's shares have fallen 20 per cent.