United Parcel Service (UPS), a renowned international shipping corporation based in Sandy Springs, has decided to divest its shares in freight brokerage unit Coyote Logistics. The projected selling price for the stake is a significant $1.025 billion. This strategic move is expected to enable UPS to focus more on other profitable sectors, strengthening its position in the global market.
Once the deal is finalized, the impending buyer, RXO Inc., situated in Charlotte, North Carolina, will become North America’s third-largest brokered transportation provider. This acquisition signifies a pivotal point for RXO Inc., propelling it into a vastly larger market. Subject to customary closing conditions, this transaction is expected to be completed by the end of the year.
UPS CEO Carol Tomé stated that the sale of Coyote Logistics aims to amplify UPS’s financial outlook and align with its mission to be a “global leader in logistical solutions and small package delivery.” UPS is also planning to invest strategically in areas that can provide higher returns.
UPS divests Coyote Logistics for strategic refocus
This transformation is anticipated to bolster UPS’s competitiveness and reshape the future landscape of the logistics industry.
A decade ago, UPS procured approximately $1.8 billion for Coyote Logistics to augment service capacity during peak holiday periods. However, declining profits have led UPS to implement a cost-saving strategy, including eliminating 12,000 jobs and focusing more on operational efficiency. Despite these challenges, UPS remains dedicated to enhancing customer experiences and the evolution of e-commerce impacts.
RXO’s acquisition of Coyote will involve a cash payment of $1.025 billion, with brokered transportation services continuing to UPS until January 2030. This strategic move is expected to boost RXO’s profitability, increase its customer base by approximately 80%, diversify its offerings, and strengthen its market presence.
King & Spalding provided legal consultations for the sale to UPS, and J.P. Morgan Securities offered financial advice. After the transaction, UPS received a tax planning strategy from Ernst & Young. FedEx received legal guidance from Sullivan & Cromwell, and financial assistance was provided by Goldman Sachs & Co. This ensures the flawless execution of the sales process within legal boundaries.
