UPS (CCJ Top 250, No. 2) said Sunday it has entered an agreement to sell its Coyote Logistics business unit to RXO, Inc., for $1.025 billion. Based in Chicago, Coyote Logistics is a leading global third-party logistics (3PL) provider, working with 100,000 network carriers and managing 10,000 loads per day.
“As UPS positions itself to become the premium small package provider and logistics partner in the world, the decision to sell our Coyote Logistics business allows an even greater focus on our core business,” said UPS Chief Executive Officer Carol B. Tomé.
Tomé in January warned that UPS would make "some bold moves" to shore up revenues and stabilize its business after closing the books on a rough 2023. A selling price of $1.025 billion is a far cry from the $1.8 billion UPS paid to acquire Coyote Logistics almost exactly nine years ago.
Under the terms of the agreement, RXO will pay $1.025 billion in cash for Coyote. RXO will continue to serve UPS’s brokered transportation needs under a contract that runs through January 2030. The combination of Coyote Logistics and RXO's existing capabilities creates the third-largest provider of brokered transportation in North America.
RXO Chief Executive Officer Drew Wilkerson noted the acquisition of Coyote immediately increases the scale of its brokerage business, providing customers with more capacity across a wider array of power lanes.
“RXO will realize significant synergies from the acquisition by quickly integrating Coyote’s business into RXO and leveraging our cutting-edge technology. The addition of Coyote’s customer base will diversify RXO’s vertical mix and will increase the number of customers that do more than $1 million in business with us by approximately 80%," he said. "This acquisition will provide RXO with both immediate and long-term opportunities for revenue and earnings growth and will generate significant returns for shareholders."
The transaction is expected to close by the end of the year.
