Analysts have given a mixed response to a recent media report claiming US retail giant Home Depot had held internal talks about a potential bid to acquire XPO Logistics.
The report, by US news website Recode, said an unnamed source “close to Home Depot’s strategy” had claimed the retail giant is considering a bid for the $9bn logistics company in order to prevent Amazon buying the logistics giant. XPO Logistics saw its share price soar following the report.
Both companies have declined to comment on the report but Macquarie analyst James Clement believes the lack of acquisition activity by XPO could indicate a deal with Home Depot.
He said: “CEO Brad Jacobs was active in the press, saying XPO was, once again, looking for deals and was prepared to spend “several billion dollars,” yet no deals have been announced. In light of this delay and last week’s report, we conclude that it is quite possible XPO could be a seller rather than a buyer."
However, Oppenheimer analyst Brian Nagel poured cold water on the rumour, stating that such a move contradicted Home Depot’s current strategy and added that “we are hard pressed to see Home Depot purchasing a transportation and logistics firm the size and scope of XPO."
Our XPO analyst Scott Schneeberger believes Home Depot would be most interested in XPO’s Last Mile Logistics business which represents about 6% of the total company’s 2017 revenue. Buying the entirety of XPO wold propel Home Depot into entirely different lines of business.”
Seaport Global analyst Kevin Sterling said XPO would make a “nice acquisition candidate" for Home Depot, pointing to XPO’s position as the largest provider of last-mile logistics for heavy goods in North America and to its additional service offerings such as less than truckload shipping, truck brokerage, intermodal, freight forwarding and expediting.
However Sterling also argued that an acquisition of XPO by Amazon would make more sense since the e-commerce giant would have more use for XPO’s truck brokerage, expedite, freight forwarding, and intermodal offerings.
XPO Logistics bought French family operator Norbert Dentressangle in 2015.
