UPS bolsters full-truckload business with $1.8 billion deal

[IceWizard]

Fri Jul 31, 2015 11:46am EDT
By Sagarika Jaisinghani

(Reuters) -
United Parcel Service Inc (UPS.N) said it would buy Coyote Logistics from private
equity firm Warburg Pincus for $1.8 billion to
expand its full-truckload services, the latest deal in a rapidly consolidating logistics industry.

Coyote Logistics connects customers to its
network of more than 35,000 trucking operators in North America and caters to the food and beverage, consumer goods, paper and packaging, industrial as well as retail markets.

Brokers such as Coyote Logistics and XPO
Logistics Inc (XPO.N) have reported rapid revenue growth in the past few quarters as the demand for trucks jumped due to widespread bottlenecks on rail networks.

"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.

The U.S. freight market is estimated to be worth $300 billion, with full-truckload shipping
accounting for just over half of that, according to logistics company G-Force Shipping.

Third-party logistics providers have recently
been snapped up in a series of deals, including
XPO Logistics' purchase of France-based
Norbert Dentressangle SA and Goldman
Sachs' (GS.N) acquisition of Neovia Logistics LLC. PricewaterhouseCoopers said in a recent report it was optimistic about the M