RXO Surges After Buying Coyote Logistics Unit From UPS for More Than $1 Billion
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Key Takeaways
RXO shares soared in intraday trading Monday, a day after the package delivery firm agreed to buy UPS’s freight brokerage unit, Coyote Logistics, for $1.025 billion.
RXO said the acquisition would created the third-largest brokered transportation provider in North America, and be immediately accreditive to its adjusted EPS and adjusted free cash flow.
UPS explained that the deal would help the company focus more on its core business.
RXO (
RXO
) shares soared in intraday trading Monday, a day after the package delivery firm purchased Coyote Logistics, the third-party asset-light freight brokerage unit of United Parcel Service (
UPS
), for $1.025 billion in cash.
RXO said the addition of Coyote will create the third-largest provider of brokered transportation in North America. The company noted that the deal will be “immediately and significantly accretive to RXO’s adjusted diluted earnings per share and adjusted
free cash flow
.”
RXO CEO Sees ‘Both Immediate and Long-Term Opportunities’ for Growth
Chief Executive Officer (CEO
) Drew Wilkerson explained that the acquisition “will increase the number of customers that do more than $1 million in business with us by approximately 80%.” He added that RXO would get “both immediate and long-term opportunities for revenue and earnings growth.”
UPS CEO Carol Tome said, “The decision to sell our Coyote Logistics business allows an even greater focus on our core business.”
The transaction is expected to be completed by the end of the year.
The news sent shares of RXO up more than 15% to $23.27 as of 10 a.m. ET Monday. UPS shares were about 1% higher at $137.97.
