Why GXO Logistics Is Buying Clipper Logistics

Barely six months after it was spun off from XPO Logistics, GXO Logistics (NYSE: GXO) looks ready to make its first big mergers and acquisition (M&A) deal.

According to a press release last weekend, GXO, which is the largest pure-play contract logistics company in the world, agreed to a "possible offer" to acquire U.K-based Clipper Logistics (LSE: CLG) for the equivalent of 920 pence ($1.25) per share, or roughly $1.3 billion -- 690 pence in cash and the remainder in GXO stock. According to U.K. law, GXO had to announce that the deal was in negotiations after news broke in the media.

It's not surprising to see GXO pursue such a deal. M&A is in the company's genetics. It was spun off from XPO Logistics, which came to be one of the largest transportation companies in the U.S. through a roll-up strategy, acquiring smaller companies to gain scale. GXO chief investment officer Mark Manduca has also made references to the fragmented nature of the logistics industry, implying that there's an opportunity for consolidation and for GXO to take advantage of its size and technological prowess.

Source Fool.com