XPO will retain its European business – for now.

Diving Summary:

XPO Logistics Inc. said in a securities filing Friday that it will delay the sale of its European business due to weak capital markets. “The company does not currently anticipate a sale of its European business in the near term,” XPO said in the two-sentence filing. “The company does not undertake to provide any further updates on the status of the plan, except as may be required by applicable law.” With the separation of its brokerage and contract warehousing businesses into separate companies, the company is also shortening its name to XPO. It will officially drop “Logistics” from its name as of Dec. 19, according to a separate filing, as it focuses on LTL service.

Insight into diving:

This isn’t the first time XPO’s plans have been put on hold due to circumstances beyond its control.

The company halted its spinoff strategy in March 2020 when the coronavirus pandemic reached the United States, but the company later resumed the initiative, spinning off its contract storage business, GXO, in August 2021 and its brokerage subsidiary, RXO, last month.

The company’s European operations include trucking, part-time freight, freight brokerage, managed transport, last-mile and freight services. Last month, the company announced it had hired more than 1,000 new drivers in the UK and Ireland in 2022.

By keeping it, XPO will be able to hold the final pieces of the conglomerate together, for now.

However, the company’s continued focus on shareholder value suggests it is more likely to sell or list its European business when it is most profitable for investors, said Satish Jindel, chairman of SJ Consulting.

“There’s nothing urgent about timing — there’s nothing sacred about it,” says Gendel, a veteran LTL watcher. “If the market conditions are good, you can do it. If the business is going strong, there’s no rush when the timing isn’t right. … It’s smart. You want to maximize shareholder value.”

The effects of Russia’s war on Ukraine could be among the concerns XPO is considering in its decision, Gendel said.

Another likely reason is the strength of the US dollar, which has been a headwind for European business in 2022, according to a Nov. 18 investor note from JPMorgan.

“For example, investing in Europe this year will fall by -17% – compared to -9% if you invest in euros and do not convert your investment back into dollars,” the bank said. “The same can be said for US-based multinationals. The strong dollar reduced third-quarter revenue growth by -4%.”