UPS to Sell Coyote Logistics to RXO for Staggering $1 Billion

By Trisha Andrada

Jun 24, 2024 03:07 AM EDT

A United Parcel Service (UPS) driver leaves with his truck from a UPS facility that is delivering vaccines to Washington, DC, and Maryland areas March 15, 2021 in Landover, Maryland. (Photo : Alex Wong/Getty Images)

United Parcel Service (UPS) announced on Sunday, June 23, that its Coyote Logistics division would be acquired by the freight transportation services firm RXO for a staggering $1.025 billion.

RXO Acquiring Coyote Logistics

In a press statement, RXO said that the $300 million and $250 million equity investments from MFN Partners and Orbis Investments, respectively, would finance the deal. The remaining funds would come from the company's equity and debt.

The purchase is anticipated to strengthen RXO's position in the market, increase its client base diversity and expansion, and widen its carrier network. After the deal closes, RXO will rank as the third-biggest North American supplier of brokered transportation.

Both RXO's adjusted diluted earnings per share and adjusted free cash flow are projected to see immediate and substantial positive effects from the merger, as stated in the announcement.

With a gross margin of around $470 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of about $86 million, Coyote Logistics brought in almost $3.2 billion in 2023. RXO is aiming for at least $25 million in cost synergies per year.

READ NEXT: Cognizant to Acquire Digital Engineering Firm Belcan for Nearly $1.3 Billion

UPS to Concentrate on Its Core Business

Reuters cited UPS CEO Carol Tome saying that the sale of the Coyote Logistics division will enable UPS to concentrate even more on its core business.

In 2015, UPS expanded its full-truckload services when it acquired Coyote Logistics for $1.8 billion from private equity company Warburg Pincus.

READ MORE: Robinhood Acquires Crypto Platform Bitstamp for $200 Million

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics