With an eye on advancing innovation in the logistics sector, Greenwich, Conn.-based XPO Logistics, a provider of global freight transportation and logistics services, said today it has formed a partnership with the Massachusetts Institute of Technology (MIT) Industrial Liaison Program (ILP), and last week it announced it has added Aris Kekedjian to its Board of Directors.
XPO said it is the first global logistics company to collaborate with the MIT ILP, an organization that matches up what XPO called MIT ILP’s world-class resources with industry-leading corporations to solve global business challenges.
“We’re excited to explore the latest developments in technology with the MIT ILP,” said Mario Harik, chief information officer of XPO Logistics, in a statement. “This is an opportunity for us to realize new levels of productivity for our customers, while providing input into the future of robotics, machine learning and systems engineering.”
XPO said that this partnership serves as an extension of its $550 million annual innovation (IT) investment, as well as a way for its 1,800 technology employees to apply new thinking in regards to global e-commerce and commercial practices.
And it added that the partnership with the MIT ILP serves as an example of how XPO is committed to being the pacesetter for emerging technologies in the logistics sector. Taking that a step further, the company pointed to its XPO Innovation Lab, which will open up to the public in late 2020 and function as the “epicenter of technological solutions for its logistics customers…and serve as a conduit for the brightest minds in logistics, including students, academics, and tech startups.
New board member: Last week, XPO Logistics appointed Aris Kekedjian to its Board of Directors as an independent director.
Kekedjian was a 30-year veteran at General Electric, where he served as chief investment officer from 2016-2019 and played a key role in the $30 billion merger between GE Oil & Gas and Baker Hughes, which XPO said meshed industrial service operations in 30 countries. Other roles Kekedjian held at GE focused on acquisitions in disruptive industries, including the industrial Internet of Things, 3D printing, life sciences and renewable energy, and his earlier positions at GE Company included roles as deputy treasurer and as managing director, Latin America. And as a divisional executive at GE, he served as global head of financial portfolio management and M&A for GE Capital; chief financial officer of GE Banking and Consumer Finance (GE Money) for the Europe, Middle East and Africa (EMEA) region; and chief executive officer of GE Capital for the MEA region, among other roles.
Kekedjian currently advises global companies on finance and M&A strategies. He holds a degree in finance and international business from Concordia University in Montreal, Canada. He formerly served on the board of directors of transportation geo-technology provider Maptuit (now Verizon), and on the advisory board of enterprise software company eMOBUS (now Asentinel).
“Aris has three decades of Fortune 20 experience, and has executed M&A transactions with a combined value of over $300 billion,” said Bradley Jacobs, chairman and chief executive officer of XPO Logistics, in a statement. “His C-suite background adds a strong global component to the financial acumen of our board.”
The value Kekedjian brings to XPO on the M&A side looks to be very valuable for the company, considering that XPO was largely constructed through heavy M&A activity, going back to its inception in 2011, when it was a $150 million company to almost $18 billion in 2019.
An XPO spokesperson noted that top executive Jacobs is legendary for having completed more than 500 acquisitions in his career across three separate industries, with Jacobs having said that M&A is part of XPO’s DNA, while the company has stepped away from M&A activity in recent years and has focused on organically growing its business.
But that could be changing, according to a recent research note issued by Morgan Stanley analyst Ravi Shanker, which observed that Jacobs is again spending time on M&A.
“M&A used to be 50% of his focus a year ago, that became zero when the stock declined and buybacks were clearly the better use of cash, now M&A is about 10-15% of the focus,” he wrote. “Mgmt. is looking at individual opportunities rather than the pipeline they had before and smaller deals rather than the ‘whales’ that they were chasing previously. Mgmt. is right now in the early stages of fact-finding/relationship-building but made it very clear that they will not raise leverage meaningfully or issue equity to do a deal. Mgmt. does not want leverage to exceed 4x (currently 3.2x and will end the year at roughly 2.75x). The target areas for M&A remain the same with forwarding less of a focus (reflecting concerns about secular disruption and the lack of scale available for sale) and neutral on truck brokerage (mgmt. believes that truck brokerage gross margins will decline going forward but automation will help defend operating margins).”
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