United Parcel Service Inc. agreed to buy Coyote Logistics from private-equity firm Warburg Pincus for $1.8 billion to expand in truckload freight and help ease peak-season congestion.
Advertisement
Chicago-based Coyote Logistics, which reported revenue of US$2.1 billion last year, is the sixth-largest U.S. truckload services provider, according to research firm Armstrong & Associates Inc.
The deal is targeted to close within 30 days. The transaction will be financed with available cash resources and through existing and new debt arrangements.
In a separate matter, UPS rival FedEx Corp. hit a bump with its planned acquisition of TNT Express NV.
“The brokered full-truckload freight segment is a high growth market and we expect it will continue to outpace other transportation segments”, UPS Chief Executive Officer David Abney said in a statement. Those employees (as well as their systems and culture) will be supported by UPS. Coyote has experienced very rapid revenue growth since inception and has built extensive relationships with a broad customer base.
A deal between Coyote and UPS is the third-largest logistics deal this year, as the industry goes through a wave of consolidation amid rising consumer demand, Bloomberg said.
Coyote arranges freight shipments through a network of more than 35,000 trucking companies, which would be a boost in managing holiday business, UPS said Friday.
The Access America founders said last year that they planned to retain an interest in the merged company but wouldn’t exercise any management in Coyote. UPS expects truck brokerage to continue to grow and pass other modes of transportation for shipping, reports Business Insider.
“We become a network integrator for our customers”, he said. The Atlanta company anticipates the transaction could result in $100 million to $150 million in annual operating savings. The software helps spot where shipping needs of customers overlap, allowing brokers to find space on trucks more easily and to offer cheaper prices in buying the capacity, Mr. Silver said.
Advertisement
The chemistry that is between the companies has been very good, said on industry analysts. For these reasons, Coyote will operate as a subsidiary of UPS, under Jeff Silver’s leadership, with careful attention given to supporting the unique characteristics that have enabled its success to date.
