United Parcel Service, Inc (NASDAQ:UPS) has bought the Coyote Logistics, LLC for $1.8 billion to adapt to the changes in the shipping market; not to forget, when UPS clumsily managed the crucial holiday shipping season in 2013. This deal is the worthy deal from the UPS to meet the exaggerating demand of the shipping in the holiday season by acquiring the shipping logistics.
Coyote Logistics is the Chicago based firm which is also a part of the private equity firm Warburg Pincus. They have built a range of software to meet the shipping demand and they have developed a network of 35,000 contract carriers to deliver the short trunk services to the companies.
Coyote Logistics and United Parcel Service share the client-customer relation, when coyote helped UPS to meet the shipping demand in the past holiday season by hiring third party carriers. UPS, an Atlanta-based company, said that Coyote will serve as the subsidiary. Coyote Logistics had $2.1 billion revenue in 2014.
UPS said that “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 is hoping to close the transaction within this month and it will use the combination of debt and cash to finance the deal. The UPS is expected to save the $100 million to $150 million in this tie-up. This deal can be the boon for the UPS as they can meet the needs of the shipping demands in the coming holiday seasons. Also, the annual cost savings and the time savings will be an added advantage for the company.
David Abney, CEO of UPS said that “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.”