The forthcoming break-up of the rump XPO Logistics is set to continue as the company revealed it was selling its intermodal arm to US freight group STG Logistics (formerly known as St George Logistics) for $710m.

The sale, tipped by Premium yesterday, is part of XPO’s plans to spin-off its freight brokerage unit from its less-than-truckload operations, which also include the sale of the intermodal operations and possible sale or IPO of its European arm.

Brad Jacobs, chairman and CEO of XPO Logistics, said: “This divestiture simplifies our business model and moves our capital structure closer to investment-grade — two priorities in our strategic plan to unlock significantly more value for our stakeholders.

“We’ve completed a key step in preparing for our planned spin-off when we’ll separate XPO into two publicly traded leaders in less-than-truckload transport and tech-enabled brokered transport services,” he explained.

The intermodal unit – which XPO has reported as part of its brokerage and other services segment and turned over $1.2bn last year – provides rail brokerage and drayage services across 48 locations and employs around 700 staff that “have transferred to the buyer in the transaction”.

The sale to STG Logistics is “subject to a customary post-closing purchase price adjustment”, XPO said.

However, the intermodal operation is well known to STG Logistics, as its CEO, Paul Svindland, was chief operating officer of Pacer International when it was acquired by XPO Logistics in 2014 for $335m and subsequently rebranded as XPO’s intermodal division.

The deal also gives an insight into the value of XPO’s European business, which now could be worth between $800m and $1.3bn, either through a sale or IPO.

In a recent investors’ presentation, XPO revealed: “Sell-side analyst reports we’ve read have estimated that, between Europe and intermodal, proceeds would be between $1.5bn and $2bn, with aggregate taxes of around $100m.”

The spin-off of the freight brokerage business from XPO Logistics remains scheduled for the fourth quarter this year.

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