C.H. Robinson to buy RXO, uniting two top truck brokers
Freight broker C.H. Robinson agreed Monday to acquire rival RXO for $5.8 billion, creating a logistics company valued at more than $25 billion. RXO shareholders would receive $30.25 a share in cash and stock, a 29% premium, and the combined company promises $300 million in yearly cost savings, partly through artificial intelligence.
America's biggest truck broker is getting bigger: C.H. Robinson agreed Monday to buy rival RXO in a cash-and-stock deal worth $5.8 billion, the companies said.
FreightWaves said the deal joins the nation's No. 1 and No. 3 truck brokers. It called it the largest truck brokerage merger in history. Brokers act as middlemen, matching shippers that need goods moved with trucking companies that have available space.
RXO shareholders will get $17.25 in cash plus 0.0856 C.H. Robinson shares for each RXO share. That works out to $30.25, a 29% premium to Friday's close, and investors can also choose all cash or all stock, within limits. RXO holders will own 11% of the combined company, which will be worth more than $25 billion including debt.
Investors cheered only one side of the deal: RXO shares jumped 22% Monday, while C.H. Robinson's fell 13%, Reuters reported.
The central promise is savings, since C.H. Robinson says it can cut $300 million a year in costs within two years. Over the past year, it has cut staff as AI agents took over tasks like pricing loads, setting up pickups and tracking cargo, Reuters reported. "RXO has some capabilities that, quite frankly, at Robinson, we don't play in," CEO Dave Bozeman told CNBC, as cited by Reuters. RXO brings last-mile delivery, the final leg to a customer's door, which C.H. Robinson wants as shippers demand faster service.
RXO had been struggling, posting 10 straight quarters of net losses, FreightWaves reported, and its stock fell below $11 last November. Reuters noted it did beat profit forecasts in its latest quarter, thanks to better pricing. RXO had grown by buying Coyote, the freight brokerage UPS used to own.
The freight market remains difficult. Trucking rates have ticked up amid a driver shortage tied to new rules, which helps brokers. But sharp swings in diesel prices are squeezing their margins, because fuel surcharges often lag cost increases, Reuters noted.
C.H. Robinson will pay the cash with new debt and has a bridge loan from Morgan Stanley. It expects the deal to lift adjusted earnings per share within nine months of closing.
MFN Partners, which holds about 17% of RXO's shares, agreed to vote yes. The deal needs regulatory and RXO shareholder approval and should close in the first half of 2027.
What we know: The price, the premium and the $300 million savings goal.
What we don't: How many jobs the cuts will touch, and whether regulators will push back.
Where outlets agree Reuters and FreightWaves both report that C.H. Robinson is buying RXO for about $5.8 billion at $30.25 a share and expects $300 million in yearly cost savings.
Where they differ RXO's stock jumped on the premium while C.H. Robinson's fell 13%, a sign investors doubt the buyer will capture the savings it promises.