Morgan Stanley Virtual Laguna Conference

Fireside Chat with Brad Jacobs and Matt Fassler of XPO Logistics

Conducted by Ravi Shanker of Morgan Stanley

September 16, 2020

As excerpt of the transcript – as usual, with focus on M&A matters – is here:

Brad Jacobs, XPO: First of all, I’m sad that people pigeonhole me as just an M&A guy. It’s one tool in the toolkit. I think I’ve got a lot more things going on than just M&A. In fact, we’ve grown the business a half a billion of EBITDA and $2 billion of revenue, doing no acquisitions, since 2015. I think our operating ability is even more important than M&A because you can buy stuff, but if you don’t improve it, then you’re not creating much value other than that first accretion on the differential between your multiple and their multiple.

“M&A is something we look at as a tool. We’ve done one recent deal that’s going through regulatory approval now and should close in a few months. That’s for some of the UK contract logistics assets of our great competitor, Kuehne + Nagel. They wanted to get out of parts of the UK market. We wanted to get more deeply into those parts. So, it was a nice win-win deal. We like that they’re in tech, e-comm and food and beverage.

“These are some of our bread-and-butter verticals and they’re key to our strategic 7 emphasis going forward. Kuehne + Nagel was happy with our price and it made sense from an accretion point of view. We’ll get tons of synergies between our UK footprint and theirs, so I’m super excited about this deal. That’s an example of the kind of M&A we want to do. We don’t want to do M&A just for the sake of doing M&A — to get some headlines and check the box of having done a deal. That’s temporary stuff. From a long-term value creation point of view, anything we do, including M&A, has to have a lot of juice in it.

“When we see M&A that has tons of juice, where we have a clear plan for how we can grow what we acquire, and grow it dramatically from where it was under previous ownership, then yes, we’ll do M&A. But we’ll continue to be very disciplined on price, on how compelling it is strategically, and on what our customers will think if we do that acquisition. Are they going to say it’s a great idea or are they going to scratch their heads and say that that doesn’t help them?

“That’s part of our discipline on M&A.”

To read the pull post, please click here.

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