Shares of RXO (RXO +22.54%), the freight brokerage that was spun off from XPO in 2022, were surging today on news that C.H. Robinson (CHRW -10.85%) would acquire it.
Robinson, the largest freight brokerage in North America, said it would acquire RXO for a combination of cash and stock.
RXO shares surged on the news, jumping 20.6% as of 10:50 a.m. ET. C.H. Robinson, on the other hand, was down sharply, losing 14.6% at the same time, a sign that investors thought the acquisition was a poor use of capital.
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What the deal means for RXO
RXO will receive $17.25 per share and 0.0856 shares of Robinson common stock for each RXO share they own, representing $30.25 per share, though the decline in Robinson stock lowers that value.
The transaction value represents a 29% premium over RXO's closing price on Friday, explaining today's pop in the stock. Under the terms of the agreement, RXO shareholders can receive all-cash or all-stock, in addition to the mix above.
The merger was unanimously approved by both boards, with the support of RXO's largest shareholder, Orbis Investments. CEO Drew Wilkerson 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."
NYSE: RXO
Key Data Points
What's next for the deal
The sell-off in Robinson shares could prompt pushback from its shareholders. The companies could also face some hurdles as they seek regulatory approval, as Robinson is already the biggest freight brokerage in North America, so the deal could be seen as anti-competitive.
If the deal doesn't close due to certain conditions, RXO would have to pay a $175 million termination fee to C.H. Robinson.
The companies expect the deal to close in the first half of 2027.
