This board is like going to the barbershop. You know how the barber rants about politics but really has no idea what he's talking about, yet he knows how to fix the entire world? That's what reading the XPO board here is like.
Menlo is not the most profitable part of the business. Menlo does a ton of volume but at thin margins. Menlo is high growth with Amazon and such, but it's not the major profit contributor. Go read the quarterlies.
The Truckload situation is completely different than LTL. Stotlar bought CFI for $700 million and you couldn't get $300 million for it today. CNW just got snookered, plain and simple, and if XPO sold it they'd have to recognize a huge loss, so for now they'll run it. I imagine they'd love to sell it because while TL isn't a bad business, CNW grossly overpaid.
Complete fantasy.
Brad Jacobs has explained why they bought Con-way many times. More to the point, it's been explained in annual reports, and you're not allowed to lie in those. Even more to the point, what he says makes sense:
- They want Menlo for the accounts in fast-moving ecommerce. Really, it's just the accounts - it's merging in with the other logistics company they bought (New Breed). Menlo has nothing but accounts - everything else is bought as needed for customers, so there is no standing inventory or such. Menlo doesn't own warehouses, for example (not that they aren't easy to find and no one would buy a company for its warehouse footprint).
- When XPO wanted to sign long-term agreements with big shippers, the shippers said they were not going to give pre-Con-way XPO much business because XPO didn't own trucks and couldn't guarantee things. Everyone expects a driver shortage - in such a situation, pre-Con-way XPO (a broker) could find itself suddenly unprofitable. Having their own fleet - in Europe and the US now - solves that problem. This has been discussed ad nauseum inside XPO, in town halls, the media, SEC filings, etc. You'd have to be willfully resisting to avoid hearing that story.
And what is this "write it off" nonsense? When you write something off, you're getting a tax credit against a loss. That's like saying "you lost $1 but we'll give you 30 cents back". No company wants write-offs - they just use them if they have no choice. The idea that someone would spend $6 billion, take $1 billion (Menlo) out, and then "write off" the remaining $5bn is just lunacy.
XPO approached CNW about buying Menlo a couple years ago but the math didn't work. When they came back in 2015, from the start they were only interested in the whole enterprise, not just Menlo.
But yeah, it's all a grand conspiracy and only you barbers have figured it all out...