GXO (NYSE: GXO) named a new leader and won regulatory approval to integrate a big acquisition. Investors are celebrating the developments, sending shares of the contract logistics provider up 11% as of 2 p.m. ET.
Image source: GXO.
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A (finally) done deal
GXO operates warehouses and supply chain networks for large corporate and government customers. Last year, the company acquired Wincanton for $962 million to boost its European capabilities, but it has been barred from fully integrating the deal due to United Kingdom Competition and Markets Authority (CMA) concerns.
On Thursday, GXO announced that the CMA has cleared it to integrate “the vast majority” of Wincanton subject to the divestment of “a small number” of grocery contracts. Integration is expected to begin in the third quarter, with collaboration on aerospace deals allowed to begin immediately.
The company also announced Patrick Kelleher, who has more than 30 years of global supply chain experience, as its new CEO. GXO has been looking for a new leader since December when current CEO Malcolm Wilson announced his intention to retire.
GXO raised its full-year revenue, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), and adjusted earnings per share (EPS) guidance as well.
Is GXO a buy?
GXO stock has lost to the market since being spun out of XPO in 2021. Thursday’s announcements could be the first step in reversing those declines.
The company has great potential capitalizing on the growing need to manage increasingly complex supply chains but has been held back by headwinds, including uncertainty about the Wincanton integration and over who will be the new CEO. Kelleher’s U.S. experience could also help drive sales increases in North America, shifting GXO’s European-heavy portfolio.
GXO’s recent performance has been disappointing, but the potential is there. The market’s enthusiasm seems justified.
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Lou Whiteman has positions in GXO Logistics and XPO. The Motley Fool recommends GXO Logistics and XPO. The Motley Fool has a disclosure policy.
