According to a release issued on Monday, June 24, RXO has entered into a definitive agreement to acquire Coyote Logistics, an asset-light freight brokerage business, for $1.025 billion from UPS.
RXO states the acquisition will enhance RXO’s market position, diversify and expand its customer base, and broaden its carrier network. At closing, RXO will be the third-largest provider of brokered transportation in North America.
UPS announced the transaction on Monday morning as well.
“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.
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.
“RXO’s highly accretive acquisition of Coyote will immediately increase the scale of our brokerage business, providing customers with more capacity across a wider array of power lanes,” said Drew Wilkerson, chief executive officer of RXO. “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%. This acquisition will provide RXO with both immediate and long-term opportunities for revenue and earnings growth and will generate significant returns for shareholders. I look forward to welcoming Coyote’s employees to our team and working together to achieve excellent results for our customers, shareholders, carrier partners and employees for years to come.”
The transaction is expected to be immediately and significantly accretive to RXO’s adjusted diluted earnings per share and adjusted free cash flow.
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 acquired business generated approximately $3.2 billion in revenue in 2023 with approximately $470 million in gross margin and approximately $86 million of adjusted EBITDA.
RXO expects annualized cost synergies of at least $25 million.
The transaction is expected to close by the end of the year, subject to regulatory review and approval. Upon completion of the transaction, the company will update its financial outlook.
Bruce Guthrie is an award-winning journalist who has lived in three states including Arkansas, Missouri and Georgia. During his nearly 20-year career, Bruce has served as managing editor and sports editor for numerous publications. He and his wife, Dana, who is also a journalist, are based in Carrollton, Georgia.
