RXO, Inc. (NYSE:RXO) entered into a definitive agreement to acquire Coyote Logistics, LLC from United Parcel Service, Inc. (NYSE:UPS) for $1 billion on June 23, 2024. Under the terms of the agreement, RXO will pay $1.025 billion in cash on a cash-free, debt-free basis. RXO will continue to serve UPS?s brokered transportation needs under a contract that runs through January 2030. The transaction will be funded with a mix of equity and debt, including a $300 million equity investment from MFN Partners and a $250 million equity investment from Orbis Investments, two of RXO?s largest shareholders. The transaction is backstopped by fully committed financing and is expected to be neutral to leverage. For the period ending December 31, 2023, Coyote Logistics, LLC reported total revenue of $3.2 billion and EBITDA of $86 million. Transaction represents multiple ~11.9X 2023 pre-synergies adjusted EBITDA.

RXO?s Board of Directors has unanimously approved the transaction, which is subject to customary closing conditions and regulatory approvals and is expected to close by the end of 2024. The transaction is expected to be immediately and significantly accretive to RXO?s adjusted diluted earnings per share and adjusted free cash flow. RXO expects annualized cost synergies of at least $25 million.

Goldman Sachs & Co. LLC acted as financial advisor for RXO, Inc. Steven Williams and David Huntington of Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor for RXO, Inc. J.P. Morgan Securities LLC acted as financial advisor for United Parcel Service, Inc. King & Spalding LLP acted as legal advisor for United Parcel Service, Inc.