Investing.com -- C.H. Robinson Worldwide Inc. is facing rating pressures following its proposed $5.3 billion acquisition of freight brokerage competitor RXO Inc., with S&P Global Ratings revising its outlook on the company to negative from stable while affirming its 'BBB+' issuer credit rating.

The proposed transaction, expected to close in the first half of 2027, will be funded through a mix of cash, stock, and $3.5 billion in new debt issuance. S&P Global Ratings expects the significant debt load to temporarily depress C.H. Robinson’s pro forma funds from operations (FFO) to debt metric into the mid- to high-20% range at close, well below the rating agency's 45% downside threshold.

To restore its credit standing to the targeted mid- to high-40% area by mid-2029, C.H. Robinson will need to execute a substantial operational overhaul at RXO while paying down approximately $1.6 billion in debt. The company plans to pause share repurchases after the third quarter of 2026 to direct its projected free cash flow, estimated to reach $1.25 billion by 2029, toward deleveraging.

A central element of the acquisition strategy hinges on capturing $300 million in net cost synergies within 24 months of closing. S&P Global Ratings views approximately $170 million of these synergies as lower-risk operational efficiencies, such as network density improvements and duplicative headcount reduction, while the remaining $130 million relies on implementing C.H. Robinson’s AI-driven lean operating model across RXO’s workforce.

Although C.H. Robinson successfully leveraged its lean operating model to boost productivity by 60% and lift operating income by 62% between early 2024 and mid-2026, replicating those results across RXO presents execution risks. RXO’s S&P-adjusted operating income margin stood at negative 3.8% in 2025 compared to C.H. Robinson’s 29.1%, primarily reflecting C.H. Robinson’s higher gross profit generation per employee.

The combined entity will significantly expand C.H. Robinson’s truckload brokerage scale, adding RXO’s 150,000 carrier relationships and 18,000 shippers to its existing network. However, credit analysts caution that freight volatility, potential customer attrition from shippers seeking broker diversification, and ongoing industry legal developments could complicate the recovery trajectory.

S&P Global Ratings indicated it could downgrade C.H. Robinson if integration delays, unfavorable freight rate environments, or premature capital returns prevent FFO to debt from comfortably exceeding 45% within two years post-close. Conversely, the outlook could stabilize if the company executes its synergy targets and sustains EBITDA growth in line with baseline projections.

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