XPO Logistics Prices Common Stock Offering of 5 Million Shares; Shares Drop

XPO Logistics, Inc. (XPO) dropped 2.10% in the early trading session today after the company announced the pricing of its 5 million shares offering at $138 per share.

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XPO is a leading provider of supply chain solutions. The offering comes after the stock spiked more than 86% over the past year.

Of the 5 million shares offered, 2.5 million will be sold by the company, and the remaining will be offered by Jacobs Private Equity. The selling stockholder is also an affiliate of XPO’s Chairman and CEO, Brad Jacobs. (See XPO stock chart on TipRanks)

Further, the company and the selling stockholder gave the underwriters a 30-day option to purchase up to an additional 0.75 million shares of XPO’s common stock at the public offering price. Any shares purchased under the option will be split equally between XPO and the selling stockholder.

XPO intends to utilize the net proceeds from the sale of 2.5 million shares to repay a part of its outstanding borrowings as well as for general corporate purposes.

The offering, expected to close on July 1, is subject to mandatory closing conditions.

XPO recently filed a Form 10 with the U.S. Securities and Exchange Commission, announcing the planned spin-off of the company’s logistics segment into a separate publicly traded company (GXO).

Barclays analyst Brandon Oglenski maintained a Buy rating on XPO and increased the price target to $180 from $160, which implies 28% upside potential from the current level. Oglenski believes that the GXO spin-off will lead to value creation for XPO shareholders.

Overall, the stock has a Strong Buy consensus rating based on 15 Buys and 3 Hold. The average analyst XPO price target of $164.06 implies 16.7% upside potential from current levels.