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UPS Buying Coyote Logistics for $1.8 Billion

UPS Buying Coyote Logistics for $1.8 Billion

United Postal Service (UPS), the largest package delivery company in the world, has entered into an agreement to purchase Coyote Logistics, a freight broker company for a cool $1.8 billion dollars from Warbung Pincus, a private equity firm. The deal with be complete within the next 30 days, pending the normal conditions and regulatory approvals are met.

Coyote Logistics began in 2006, and reported $2.1 billion in revenue last year. Coyote CEO Jeff Silver is excited, “to become a part of UPS and continue to grow, now with UPS’s support.” He continued, “Our great people, leading technology and flexible organization will enable us to scale quickly to take full advantage of the added customers, lanes and capacity within UPS,” Silver said. “It’s a great day for Coyote employees, our customers and our contracted carriers.”

Coyote’s carrier network consists of over 35,000 trucking companies and a variety of software programs created to bring short-term trucking solutions to shippers. They have been working with UPS the past several years by supplementing their fleet during the peak holiday season by hiring third-party shippers, both of which lead UPS to make the purchase.

UPS believes that Coyote will continue to enable them to adapt to changes in holiday shipping demands, which always proves to come with big logistical challenges. “UPS is enthusiastic about this acquisition on many levels because there are opportunities for growth, synergistic efficiencies and transfer of best practices and systems across all of our operating segments,” UPS CEO David Abney said.

Coyote “has played a growing role in supporting UPS peak operations over the past few years and the company expects to leverage Coyote’s carrier network even further for this purpose in the future,” UPS said in a statement. Coyote keep its name and remain a separate entity, becoming a subsidiary of UPS.

UPS Chief Commercial Officer Alan Gershenhorn said, ““The chemistry between the two companies has just been outstanding.” He expects the new technology that Coyote offers will allow UPS’s customers to book and sell space that would otherwise remain empty on their trucks, which amounts to about seven million empty trip legs every year. Being able to fill those spaces will increase the yearly revenue of UPS.

Jeff Silver, the founder of Coyote Logistics, explains his company’s unique hiring practices. They hire young employees without any transportation experiences. They then train them using an electronic platform that specializes in joining brokers and customers. Their software is able to learn where customers’ needs overlap which helps brokers fill those empty trucks and give cheaper prices as well. “We become a network integrator for our customers,” Silver said. “It gets us out of the role of just being a traditional broker.”

The purchase is expected to begin adding income in 2016, generating $100 to $150 million in yearly operating synergies.

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