UPS to Sell Coyote Logistics to RXO for $1.025 Billion
The sale, expected to close by the end of the year, allows UPS to focus on its core package-delivery services
UPS has announced the sale of its freight brokerage business, Coyote Logistics, to RXO for $1.025 billion. This move, part of UPS's strategy to focus on its core package-delivery services, comes nine years after acquiring Coyote for $1.8 billion.
The sale, subject to regulatory approval and expected to close by year-end, will allow UPS to streamline its operations. “The decision to sell our Coyote Logistics business allows an even greater focus on our core business,” said UPS CEO Carol Tomé.
Coyote Logistics, headquartered in Chicago, manages around 10,000 loads per day through a network of over 100,000 carriers and serves 15,000 customers. It generated $3.2 billion in revenue in 2023.
RXO, a Charlotte-based freight broker, aims to become the third-largest brokered transportation provider in North America with this acquisition. The deal is expected to nearly double RXO's annual revenue to $7.1 billion and will integrate Coyote’s 2,500 employees into RXO.
UPS plans to update its financial outlook post-transaction, which will also include a contract for RXO to provide brokered transportation services to UPS through January 2030. RXO anticipates at least $25 million in annualized cost synergies from the acquisition.
It's been a busy couple of weeks for UPS. The shipping company, which was voted America's second-most trusted brand, launched a fast delivery service for oversized items through its subsidiary Roadie.
This sale is part of Tomé's broader strategy to shed less-profitable business units, following the sale of UPS Freight in 2021. Tomé had earlier indicated that Coyote's cyclical revenue and low margins were not fully understood when UPS acquired it in 2015.
Despite the sale, UPS remains committed to optimizing its core package delivery services amid shifting economic conditions and recent business challenges.
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