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Will Home Depot Acquire XPO Logistics?

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Acquisition rumors

On December 22, 2017, Recode, a technology news website, reported that Home Depot (HD) is looking to possibly acquire XPO Logistics (XPO). XPO is a public company that provides supply chain solutions around the world. The possible acquisition is seen as part of Home Depot’s strategy to compete with Amazon (AMZN) and also keep XPO away from Amazon.

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About XPO Logistics

XPO Logistics, incorporated on May 8, 2000, operates in two segments: Transportation and Logistics. The Transportation segment operates last mile, freight brokerage, intermodal, less-than-truckload, full truckload, and global forwarding services. Logistics, which is referred to as its supply chain, provides a range of contract logistics services, value-added warehousing and distribution, and other inventory solutions.

XPO, which calls itself the largest provider of last-mile logistics for heavy goods in North America, posted revenue of $3.9 billion in 3Q17. Compared to 3Q16, its revenue rose 4.7%. The Logistics segment posted a rise of 8.3%, and the Transportation segment rose 2.5%. Revenues for the Logistics segment were driven by growth in demand for contract logistics in both Europe and North America. Growth in the Transportation segment was driven by a rise in North American freight brokerage, last mile, less-than-truckload, and European less-than-truckload.

Home Depot is expecting the acquisition of XPO to boost its business. Oppenheimer expects the acquisition of XPO to propel Home Depot into different lines of business. The acquisition would be Home Depot’s third acquisition since the middle of 2017. In July 2017, it acquired Compact Power Equipment Rental, and on December 19, 2017, it acquired The Company Store.

Next, let’s take a look at Home Depot’s stock performance.

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