Key Takeaways
- RXO shares jumped 22% after C.H. Robinson agreed to buy the company for an implied $30.25 a share in cash and stock, or $5.8 billion.
- After the jump, RXO trades a little less than 10% below the deal’s implied value, because 43% of the price is paid in C.H. Robinson stock and the deal isn’t expected to close until the first half of 2027.
- C.H. Robinson plans to cut about $300 million of yearly costs at RXO within two years of closing, and will borrow and pause buybacks to pay for the deal.
- An investor holding about 17% of RXO has already agreed to vote yes, so the things to watch are regulators and C.H. Robinson’s stock price.
RXO (RXO) shares soared 22% on Monday after C.H. Robinson Worldwide (CHRW) agreed, before the opening bell, to buy the truck brokerage for an implied $5.8 billion.
“Joining C.H. Robinson represents an exciting next chapter for our company, our employees and our customers,” said Drew Wilkerson, RXO’s chairman and CEO.
For RXO shareholders, the jump has captured most of the deal’s value. What’s left is a small gap that depends on regulators and C.H. Robinson’s stock.
The details
- $17.25 in cash plus 0.0856 C.H. Robinson shares per RXO share, an implied $30.25 (using C.H. Robinson’s 16-day average price of $151.88 through Friday)
- A 29% premium to Friday’s close
- About 57% paid in cash and 43% in stock overall
- Expected to close in the first half of 2027
Why there’s still a gap
RXO still trades a couple dollars below $30.25.
Part of that is time. The deal needs approval from regulators and from RXO shareholders, and the vote looks like the easy part. MFN Partners, which owns about 17% of RXO, has agreed to vote yes, and Orbis Investments, RXO’s largest shareholder, fully supports the deal.
The rest is C.H. Robinson’s stock. Every $10 move in its share price moves the deal’s value by about $0.86 per RXO share. At Friday’s close, the stock was near its usual valuation: 22.7 times forward earnings, against a five-year average of 21.6x and a February peak of 33.2x…
C.H. Robinson will also borrow to pay the cash part and pause buybacks until its debt is back in its target range, which it expects by the end of 2028.
The deal sets the price now
RXO wasn’t cheap going in. On Friday it traded at 24.4 times forward EBITDA:
Monday’s jump hikes that by quite a bit, so the deal price is what holds the stock up now.
To make that premium pay, C.H. Robinson plans to bring its Lean AI operating model to RXO and cut about $300 million of yearly costs within two years of closing.
For RXO holders, the big move is done. What’s left is a little less than 10% over as long as nine months, and C.H. Robinson’s stock decides part of it. Of course, regulators still have to sign off, and anyone taking shares is betting that the $300 million shows up.
So what is RXO stock actually worth if the deal falls through?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what RXO could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
