A deal for the Chicago-based transportation management service provider would be worth at least $1.8 billion, according to initial reports from Bloomberg Business.
United Parcel Service Inc. has begun discussions to purchase Chicago-based transportation management service provider Coyote Logistics LLC, according to initial reports from Bloomberg Business.
The deal for Coyote would be worth at least $1.8 billion and an agreement could be reached as soon as this month, two anonymous sources with knowledge of the matter told Bloomberg.
The sources said Coyote is backed by New York-based private equity firm Warburg Pincus, which first invested in the company in 2007 and could potentially use an initial public offering to sell its stake in the company as opposed to a straight acquisition or merger. Warburg Pincus has assisted Coyote in previous deals, including a merger with Access America Transport last March. Coyote said at the time the combined company would be one of the biggest third-party logistics providers in North America, with run rate revenues of more than $2 billion, 17 locations, about 40,000 contracted carriers, and 1,750 employees.
Although the UPS-Coyote deal could still fall through, if it does come to fruition, it would be the third largest logistics acquisition of the year, which is still only half over.
FedEx Corp. in April reached an agreement to acquire Dutch parcel delivery company TNT Express for $4.8 billion, a deal that was given an official blessing from the European Shippers’ Council just last week. European regulators blocked a similar bid from Atlanta-based UPS to acquire TNT in 2013. Continuing with its own roll-up acquisition strategy, XPO Logistics Inc. also agreed to purchase French logistics powerhouse Norbert Dentressangle SA and its iconic red trucks for about $3.53 billion including debt in April.
“On the surface, Coyote seems an odd acquisition for a mega-shipper focused on parcel shipments to make,” investment firm William Blair said in a customer advisory note. “However, UPS has been dabbling in the truck brokerage business over the last few years, and we believe truckload is a gap in its portfolio. Many investors were skeptical of the freight forwarding/distribution as well, and UPS over time has built that into a successful franchise after a rocky start.
“While many of Coyote’s customers are larger, which would fit nice with UPS’s core strength and customer profile, it also serves smaller and midsize ones as well, which is an area UPS has been trying to penetrate more. Obviously any acquisition’s value comes down to what shareholder wealth you can create with it, and while it would take some time, we believe it ultimately would be a positive fit for UPS should it occur.”
A spokesman for Coyote Logistics told American Shipper the company has “no comment” regarding the reports.
UPS reportedly looks to acquire Coyote Logistics
