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.
The impending buyer, RXO Inc., situated in Charlotte, North Carolina, is set to become the third-largest brokered transportation provider in North America once the deal is finalized. This acquisition signifies a pivotal point for RXO Inc., propelling it into a vastly larger market. It is expected that this transaction will be completed by year’s end, subject to customary closing conditions.
UPS CEO Carol Tomé stated that the sale of Coyote Logistics aims to amplify UPS’s financial outlook and sync with its mission to be a “global leader in logistical solutions and small package delivery.” UPS is also making plans 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 Coyote Logistics for approximately $1.8 billion to augment service capacity during peak holiday periods. However, declining profits have led UPS to implement a cost-saving strategy, which has included eliminating 12,000 jobs and focusing more on operational efficiency. UPS remains dedicated to enhancing customer experiences and the evolution of e-commerce impacts, despite these challenges.
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 customer base by approximately 80%, diversify its range of offerings, and strengthen its market presence.
Legal consultations for the sale were provided to UPS by King & Spalding, and financial advice was offered by J.P. Morgan Securities. After the transaction, UPS received 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.
