Afternoon Coffee: Consumer Sentiment Drops in July, UPS Buys Coyote Logistics

The newspaper said shippers are switching from slower and cheaper delivery methods, and that third-party logistics companies such as Coyote grew 20 percent overall past year.

Chicago just scored its next billion-dollar acquisition.

(NYSE:UPS) recently announced in a press release that it had entered into an agreement to acquire Coyote Logistics for $1.8 billion.

Coyote arranges freight shipments through a network of more than 35,000 trucking companies, which would be a boost in managing holiday business, UPS said Friday.

UPS will be paying for Coyote Logistics with a mix of cash and new and existing debts.

“The brokered full-truckload freight segment is a high growth market and we expect it will continue to outpace other transportation segments”, UPS Chief Executive David Abney said.

Coyote had annual revenue of $2.1 billion in 2014, compared with UPS’s $58.2 billion.

Closing is expected within 30 days.

“This deal shouldn’t move the needle at UPS, but could support shares of smaller brokers near-term by driving further consolidation speculation”, Susquehanna Financial Group analyst Bascome Majors wrote in a note on July 22, when Bloomberg reported of a possible UPS-Coyote Logistics deal.

Acknowledging that Coyote “possesses significant industry knowledge, intellectual property, employee talent, and has a strong company culture”, UPS said the company would continue to operate as a subsidiary with the current management team that includes CEO Jeff Silver and COO Jim Sharman.

This transaction follows a trend of larger logistics deals this year.