C.H. Robinson on Monday morning announced plans to acquire RXO Inc in a $5.8 billion stock and cash transaction to form a company it said would be worth $25 billion.
The goal of the acquisition, according to a press release, is to "unlock significant productivity improvements and drive operating margin expansion" by applying C.H. Robinson's "Lean AI operating model to RXO's business."
The company expects to generate $300 million of "net run-rate cost synergies within two years" following the transaction close.
Combining C.H. Robinsons massive brokerage and global forwarding with RXO's expedited and last mile services "will create a more comprehensive offering for customers across a larger and denser network," a press release announcing the acquisition said.
Overall, the company said the move was geared towards "driving profitability and creating shareholder value" through expanded reach and efficiency.
The companies held a conference call at a new website created to explain the acquisition.
“This transaction is a natural next step in our transformation, allowing us to create a more scaled, resilient North American third-party logistics provider positioned to offer exceptional customer service and redefine the future of our industry,” said Dave Bozeman, C.H. Robinson President and Chief Executive Officer.
Drew Wilkerson, RXO Chairman and Chief Executive Officer, said, “Joining C.H. Robinson represents an exciting next chapter for our company, our employees and our customers. We have built a strong business by staying relentlessly focused on our customers, operating with agility and delivering solutions that help them navigate an increasingly complex supply chain."
One of RXO's biggest shareholders said the move would give RXO a good infusion of cash.
Adam R. Karr, President and Portfolio Manager at Orbis Investments, said, “Orbis is RXO’s largest shareholder and has owned the Company since it became independent. We know the business and the team well, and we fully support this transaction. It gives RXO shareholders substantial cash today and continued ownership in a combined platform with significant upside.”
C.H. Robinson and RXO's stock both suffered considerably following the July 21 $604 million verdict against C.H. Robinson, the first real nuclear verdict following the landmark Supreme Court decision in in Montgomery v. Caribe Transport II, LLC.
