United Parcel Service (NYSE:UPS) announced on Sunday that it will sell its Coyote Logistics unit to RXO (RXO) for $1.025 billion. The news prompted a significant market reaction, with RXO shares surging over 14% in premarket trading on Monday.
The acquisition will be financed through a mix of equity and debt, including a $300 million equity investment from MFN Partners and a $250 million equity investment from Orbis Investments.
UPS CEO Carol Tomé commented on the sale, stating, “The decision to sell our Coyote Logistics business allows an even greater focus on our core business.”
In response to the announcement, Morgan Stanley analysts reiterated their Buy rating on RXO shares. They noted, “We see the deal as immediately accretive to RXO’s adjusted EBITDA and EPS and view the transaction multiple at 12x pre-synergy 2023 EBITDA as highly attractive given where we are at the bottom of the cycle.
The analysts further highlighted the strategic benefits of the acquisition, stating, “We see the deal as significantly expanding RXO’s scale, catapulting PF RXO as the third-largest freight broker in North America.”
This transaction marks a significant milestone for RXO, positioning it for increased competitiveness and growth in the logistics and freight brokerage industry.
Related topics: