Billionaire Dealmaker Cools on M&A With Focus on XPO Growth

(Bloomberg) -- Brad Jacobs made a fortune during a decades-long wave of mergers and acquisitions. Now he's putting deal making on hold and focusing his attention on expanding XPO Logistics Inc. from the inside.

“Acquisitions are not in our life at the moment,” Jacobs, 60, the company's chairman and chief executive officer, said in a conference call with analysts in February. “We've got so many work streams under way that create lots and lots of value, and we don't have to pay” a premium for those, he said.

Jacobs's deal team has executed more than 500 transactions in the past 30 years, combining businesses as diverse as logistics, trash collection and construction equipment. Now, the pursuit of internal growth at XPO is helping fuel savings from cost controls as well as double-digit revenue growth in the e-commerce delivery business. Its shares have surged 61 percent in the past year, lifting the value of Jacobs's 15 percent stake to $936 million.

The Bloomberg Billionaires Index values Jacobs's personal fortune at more than $1.4 billion, including funds from prior stock sales, and real estate in Connecticut and Florida. He declined to be interviewed and to comment on his net worth.

Jacobs took over XPO in 2011, and by 2014 had doubled its value, executing 13 acquisitions in an industry one analyst said at the time was a "boulevard of broken dreams" for deal makers. He followed with five more deals, including a $3 billion takeover of trucker Con-way Inc. in 2015 that prompted a 33 percent plunge in XPO's shares.

“When they bought Con-way, the carrier was one of the worst performers relative to its peers,” said Bloomberg Intelligence analyst Lee Klaskow. “They've extracted a lot of costs out of the network and walked away from unprofitable business. Lots of people were very skeptical of the Con-way transaction. He's proved lots of people wrong.”

XPO, which arranges freight shipments and manages its own truck fleet, has more than 87,000 employees in 1,425 locations, according to its website. It's the second-biggest freight brokerage in North America, according to Transport Topics, a trade publication. Fourth-quarter revenue climbed 10 percent from a year earlier on strong e-commerce demand and improved performance at the North America trucking unit, which includes Con-way.

Jacobs, a native of Providence, Rhode Island, typically prefers to do deals without bankers, using his own team to find targets and negotiate prices, only tapping Wall Street for financing.

He's not just a deal maker, having also run the four companies he built into industry leaders before taking over XPO, starting with Amerex Oil Associates Inc., a New Jersey oil brokerage he co-founded that was sold in 1983. A year later he established an oil-trading firm in England that he oversaw for five years before moving back to the U.S. He created United Waste in 1989 with the aim of combining local trash collectors. Eight years and 250 acquisitions later, he sold the business for more than $2 billion, according to a 2014 Bloomberg profile. 

Private Equity

Then came United Rentals Inc., the construction-equipment business he started in 1997, took public the same year and ran for a decade. Deciding the logistics industry was his next project, he used Jacobs Private Equity LLC to take a majority stake in XPO's predecessor, Express-1 Expedited Solutions, for $135 million in 2011, replacing the board and naming himself CEO.

The next deal, he hints, may not be that far away.

“Sooner or later, whether it is sooner like in six to nine months, or later like two years or two-and-a-half years, we will go back and start doing some M&A,” Jacobs said during the Feb. 22 conference call. “Building up an M&A pipeline doesn't happen overnight.”

To contact the reporter on this story: Tom Metcalf in San Francisco at tmetcalf7@bloomberg.net.

To contact the editors responsible for this story: Robert LaFranco at rlafranco@bloomberg.net, Peter Eichenbaum