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Ups Sells Coyote Logistics To Rxo

UPS Sheds Weight: Coyote Logistics Sold to RXO for $1.025B

UPS Sheds Weight: Coyote Logistics Sold to RXO for $1.025BUPS Sheds Weight: Coyote Logistics Sold to RXO for $1.025B
UPS announces sale of Coyote Logistics to RXO, Inc

Published: June 24th, 2024. 

United Parcel Service, Inc. (UPS) has announced the sale of their third-party logistics (3PL) subsidiary, Coyote Logistics, to RXO, Inc., for $1.025 billion. The strategic decision reflects UPS’s focus on their core small package delivery services and logistics operations. This move is aligned with the company’s broader strategy of streamlining their portfolio to better serve their customers and drive innovation.

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Background & Details of the Transaction

Coyote Logistics is a significant player in the logistics industry. They are known for their expansive network of 100,000 carriers and handling around 10,000 loads daily. Subject to regulatory approvals, the acquisition of RXO, Inc. should be complete by the end of the year. UPS plans to update their financial outlook post-transaction, indicating the importance of this deal in shaping their future financial and operational strategy.

Strategic alignment and corporate vision

Carol B. Tomé, CEO of UPS, highlighted that the sale is a crucial part of UPS’s strategy to become the best small package provider in the industry. UPS aims to concentrate on their primary logistics and delivery services by divesting non-core assets like Coyote Logistics. This focus is encapsulated in their strategic vision, “Customer First. People Led. Innovation Driven,” which underscores the importance of enhancing the customer experience, fostering employee engagement, and driving technological advancements.

Financial and legal advisory

J.P. Morgan Securities LLC is UPS's financial advisor, while King & Spalding provides legal advice. These partnerships ensure a robust and compliant transaction process, reflecting UPS’s commitment to maintaining high financial and legal integrity standards.

Company overview and commitment

UPS reported revenues of $91.0 billion in 2023 and operates in more than 200 countries and territories, with a workforce of approximately 500,000 employees. The company remains dedicated to “Moving our world forward by delivering what matters.” UPS prioritizes reducing their environmental footprint and promoting diversity, equity, and inclusion across global operations.

Implications and future outlook

The sale of Coyote Logistics is a strategic move that allows UPS to reallocate resources and focus on enhancing their core capabilities in the small package delivery sector. This sector is central to UPS’s long-term growth strategy, seeking to expand their market share and improve operational efficiencies. By divesting from Coyote Logistics, UPS is better positioned to invest in technologies and processes that enhance delivery speed, reliability, and customer satisfaction.

Final Thoughts

The divestiture of Coyote Logistics to RXO, Inc. for $1.025 billion marks a significant step in UPS’s strategic journey towards streamlining its operations and focusing on their core competencies. This transaction will positively impact UPS’s financial health and operational focus, reinforcing their commitment to innovation and customer service excellence. As UPS continues to evolve in a dynamic market environment, this strategic sale underscores their adaptability and forward-thinking approach to business.

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