GXO CEO sees large M&A opportunities in Canada

By Amy-Jo Crowley

LONDON (Reuters) – GXO Logistics, the world’s largest contract logistics provider, is open to sizeable takeover deals of more than $1 billion in Canada, Chief Executive Malcolm Wilson said earlier this week. 

New York-listed GXO, with a value of $6.19 billion, bought Britain’s Clipper Logistics, which distributes goods for Marks & Spencer and Morrisons, for around $1.3 billion last February.

The CEO said GXO mainly targets “very large” companies in line with the size of Clipper or more, adding that nothing smaller is worth its while. It could consider a sizeable acquisition in Canada to fill geographical gaps, or verticals such as omnichannel retail and aerospace where GXO is not present in a specific country, he added. 

GXO, which manages outsourced supply chains in addition to warehousing, went public in 2021 after it was spun off from U.S. logistics company XPO. GXO expects to generate a total of $2 billion of free cash through to 2027, which it can use for share buybacks, mergers and acquisitions, and organic growth, Wilson said in an interview in London on Monday. GXO had $1.9 billion of total debt as of the end of September.

Revenue grew 16% organically to $2.3 billion in the third quarter, as adjusted earnings before interest, taxes, depreciation and amortization increased to $192 million from $162 million.

The company expects single-digit revenue growth of 6%-8%, as some customers face higher costs amid soaring inflation and interest rates after the Ukraine war, Wilson said. 

He also said GXO is in “hiring mode” as opposed to firing, despite the economic backdrop, driven by its “resilient” business model based on five- to 10-year contracts with customers.

Shares in GXO are down more than 40% in the last year.

(Reporting by Amy-Jo Crowley; Editing by Leslie Adler)