RXO Inc. has recently announced its acquisition of United Parcel Service Inc.’s Coyote Logistics, an asset-light freight brokerage business, for over $1 billion. This strategic move positions RXO as the third-largest provider of brokered transportation services in North America.
Headquartered in Charlotte, North Carolina, RXO will finance the acquisition through a combination of equity and debt, with a $300 million equity investment from MFN Partners and a $250 million equity investment from Orbis Investments, two major shareholders of RXO.
CEO of RXO, Drew Wilkerson, expressed optimism about the acquisition, highlighting the potential synergies that will arise from integrating Coyote’s operations with RXO’s advanced technology. The addition of Coyote’s customer base is expected to enhance RXO’s vertical mix and expand its customer portfolio significantly.
As part of the agreement, RXO will cater to UPS’s brokered-transportation requirements until January 2030. This deal marks the conclusion of UPS’s nine-year association with Coyote, which it acquired for $1.8 billion from Warburg Pincus in 2015.
In 2023, Coyote recorded revenues of approximately $3.2 billion, with a gross margin of around $470 million and adjusted EBITDA of $86 million. RXO anticipates annual cost synergies of at least $25 million from the acquisition and has reaffirmed its second-quarter adjusted EBITDA forecast of $24 million to $30 million.
Goldman Sachs Group Inc. is acting as the financial adviser to RXO, while Paul, Weiss, Rifkind, Wharton & Garrison is providing legal counsel for the transaction.
