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CHARLOTTE, N.C. - RXO (NYSE: RXO), an asset-light transportation solutions provider, has secured $550 million through private financing with MFN Partners, LP and accounts managed by Orbis Investments. The funding is earmarked for the acquisition of Coyote Logistics, a subsidiary of UPS focused on truckload freight brokerage.
The company disclosed the sale of approximately 20.95 million shares of common stock at $20.21 each, matching the closing price on June 21, 2024, just before the acquisition announcement. Additionally, pre-funded warrants to purchase around 6.26 million shares at $20.20 each were also part of the deal. RXO is expected to close the acquisition in the early fourth quarter.
Goldman Sachs & Co. LLC and Paul, Weiss, Rifkind, Wharton & Garrison LLP are advising RXO on the financial and legal aspects of the transaction, respectively. The securities sold in this private financing have not been registered under the Securities Act of 1933 and are subject to restrictions on resale in the U.S. RXO has pledged to file a registration statement for the resale of the common stock and to seek stockholder approval for the warrants' exercise by the end of 2024.
RXO, headquartered in Charlotte, North Carolina, leverages technology and an extensive carrier network to provide truck brokerage and other transportation services across North America. The company's services include managed transportation and last-mile delivery solutions.
In other recent news, RXO, Inc. reported a strong second quarter in 2024, with adjusted EBITDA reaching $28 million. Brokerage volume grew by 4%, including a 40% increase in less than truckload volume, while full truckload volume dipped by 2%. In addition, RXO announced significant new business wins and a robust sales pipeline in managed transportation.
The company also reported pressures on brokerage gross margins, expected to persist into the third quarter due to increasing bid rates. TD Cowen, an analyst firm, maintained its Hold rating on RXO, while raising the price target to $28 from the previous $23, reflecting RXO's performance and near-term expectations.
Furthermore, RXO is currently in the process of acquiring Coyote Logistics, a development that is being closely watched by the market. These are among the recent developments for RXO, as the company continues to navigate the market, capturing growth opportunities while managing challenges.
InvestingPro Insights
As RXO (NYSE: RXO) moves forward with its strategic acquisition of Coyote Logistics, the company's financial health and market performance offer valuable insights for investors. According to InvestingPro data, RXO currently has a market capitalization of $3.38 billion and has experienced a significant price uptick, with a 39.01% return over the last three months. This positive momentum is also reflected in the year-to-date price total return of 23.47%.
InvestingPro Tips suggest that analysts are optimistic about RXO's future profitability, predicting the company will turn a profit this year. This aligns with the company's expectations of net income growth. However, it's important to note that RXO is trading at high valuation multiples, with a Price / Book ratio of 5.69 as of the last twelve months ending Q2 2024, which may indicate the stock is priced optimistically relative to its book value.
Despite not being profitable over the last twelve months, RXO's recent performance and the anticipated strategic benefits of acquiring Coyote Logistics could position the company for future growth. For investors interested in deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/RXO, offering a more comprehensive view of RXO's financial landscape and potential investment opportunities.
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