XPO Logistics’ GXO Prices Notes Offering Worth $800M

XPO Logistics Inc. (XPO) announced that GXO Logistics, Inc., its planned spin-off company, has priced an offering of notes worth $800 million.

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The company recently filed a Form 10 related to the company’s planned spin-off of its logistics segment into a separate, publicly-traded company (GXO). Shares of XPO, the leading global provider of supply chain solutions, were down 3.8% on June 17.

The spin-off is expected in the third quarter of 2021, subject to certain regulatory approvals. (See XPO stock chart on TipRanks)

The notes offering comprises two notes worth $400 million each: notes due 2026 at an interest rate of 1.650% and notes due 2031 at a rate of 2.650%. Interest for both notes will be payable semi-annually, in January and July, starting on January 15, 2022, until their respective maturities.

Subject to closing conditions, GXO expects the notes offering to close on July 2. The notes will be offered only to qualified institutional buyers.

GXO plans to use the proceeds to finance the cash payout to XPO and pay off expenses related to the spin-off transaction.

Baris Oran, CFO at GXO commented, “We’re pleased with the successful outcome of the $800 million debt offering we priced today. We’ve completed another major step forward in the separation of GXO as a global, pure-play logistics company.”

Truist Financial analyst Stephanie Benjamin recently maintained a Buy rating on the stock but increased the price target on XPO from $160 to $176 (24% upside potential).

Benjamin believes that XPO’s business has failed to come to analysts’ attention due to their non-understanding of the business and lack of similar companies with which to compare it.

Overall, the stock has a Strong Buy consensus rating based on 15 Buys and 3 Holds. The XPO average analyst price target of $163.89 implies 15.56% upside potential from current levels. Shares of XPO have jumped 82% over the past year.