Multiple media outlets are reporting anonymous sources who have said negotiations are underway for UPS to acquire Coyote Logistics, LLC, for US$1.8 billion or more. Coyote, a Chicago based 3PL, said it represents more than 35,000 national carriers. Coyote has been backed by private equity firm New York City-based Warburg Pincus, since 2007, shortly after Coyote was founded. Coyote then acquired at least three other firms to expand its services. Earlier this year, Reuters reported that Coyote had been considering pursuing an IPO in the second half of 2015, which could boost its value to as high as $2 billion, but an outright sale to UPS could negate that plan.
The addition of Coyote to UPS would give the latter a foothold in the freight brokerage business, which grew 20 percent overall last year, according to Nasdaq. The 3PL sector is expected to reach almost $200 billion in overall sales revenue by 2018, according to research firm Armstrong & Associates, which lists Coyote as the 17th largest 3PL in the United States, with gross revenues of $1.950 billion in 2014.
This has been quite the year for mergers and acquisitions in the logistics sector. FedEx is getting closer to accomplishing its $4.8 billion bid for TNT Express, and U.S.-based XPO Logistics is in the process of acquiring the larger French logistics firm Norbert Dentressangle. According to Nasdaq, analysts questioned how a UPS/Coyote deal would work given that UPS owns its trucks and airplanes, which is very different from Coyote’s business model.
Bloomberg, which broke this story, said a deal between Coyote and UPS would be the third-largest logistics deal this year.