XPO snags $700 million in financing for acquisitions

Ontario Teachers Pension Plan is among the investors plugging cash into XPO.    The freight brokerage and third party logistics company XPO said late Thursday that it has secured $700 million in financing from three investment funds, PSP Investments, GIC, Singapore’s sovereign wealth fund, and the Ontario Teachers’ Pension Plan.
   The funds will be used to finance unspecified acquisitions, the company said. The financing equates to roughly 22 percent of XPO’s common stock.
   As a result of the transaction, XPO has accelerated its growth projections, aiming to hit $9 billion in revenue and $575 million of earnings before interest, tax, depreciation and amortization by 2017. The previous targets were $7.5 billion and $425 million, respectively.
   “This strategic investment by three blue-chip institutions is a strong endorsement of our plan for value creation,” said Bradley Jacobs, chairman and chief executive officer of XPO Logistics. “With the benefit of $700 million of additional equity to accelerate our growth, we can capitalize on an acquisition pipeline that’s livelier than expected.”
   XPO has made several noteworthy acquisitions in 2014, most prominently the purchases of Pacer International for $335 million and New Breed Logistics for $615 million.
   “The proceeds will be used to fund future acquisitions, and the company indicated that the decision to proceed with the equity offering was driven by a full pipeline for deals,” said the investment bank Stifel in a note Friday. “Debt offerings get harder and harder each time, and the company just completed a large one last month when it acquired New Breed — so an equity offering is not a shock for the company.
   “XPO has rounded out its service offerings over the last year, and has strayed away, to some degree, from freight brokerage. Although we have no knowledge of pending deals, we would be surprised if the company does not make a big move in freight brokerage, perhaps acquiring one of the large, private players in the space. The company has also indicated previously that it is looking to add more scale in the last-mile delivery market.”