UPS, the world’s largest package delivery company, has announced the sale of its Coyote Logistics business unit to RXO, a transportation and logistics solutions provider, for $1.025 billion. The deal, structured with a combination of equity and debt, includes significant investments from MFN Partners and Orbis Investments totaling $550 million.
RXO, based in North Carolina, specializes in facilitating freight movement for shippers and carriers. The acquisition of Coyote Logistics marks a strategic expansion for RXO into the logistics sector, enhancing its capabilities in managing and optimizing transportation networks.
UPS originally acquired Coyote Logistics in 2015 from Warburg Pincus, a private equity firm, for $1.8 billion. Coyote Logistics has since operated as a subsidiary of UPS, offering full-truckload services aimed at streamlining and improving transportation efficiency for businesses across various industries.
In a statement regarding the sale, UPS Chief Executive Officer Carol Tome emphasized the decision as a means to sharpen the company’s focus on its core business operations. “The decision to sell our Coyote Logistics business allows an even greater focus on our core business,” stated Tome, highlighting UPS’s commitment to enhancing its core package delivery services amidst evolving market dynamics.
The transaction underscores UPS’s strategic realignment efforts to optimize its portfolio and allocate resources more effectively. By divesting Coyote Logistics, UPS aims to streamline operations and concentrate on expanding and innovating its core services, which include global shipping, logistics, and supply chain solutions.
For RXO, the acquisition of Coyote Logistics presents an opportunity to leverage its expertise in logistics management and further strengthen its market position in the transportation industry. The influx of equity investments from MFN Partners and Orbis Investments underscores investor confidence in RXO’s strategic direction and growth potential following the acquisition.
As the logistics and transportation sectors continue to evolve, mergers and acquisitions such as this deal between UPS and RXO reflect ongoing efforts by companies to adapt to changing market conditions and enhance operational efficiencies. The completion of the transaction is subject to customary closing conditions, including regulatory approvals, and is expected to be finalized in the coming months. UPS says they want to focus on “core business” after this sale.
