UPS buying Coyote Logistics for $1.8 billion

Keynote speaker and CEO of Coyote Logistics Jeff Silver speaks Wednesday, Nov. 12, 2014, at the Chattanooga Area Chamber of Commerce's Spirit of Innovation Awards luncheon at the Chattanooga Convention Center in Chattanooga, Tenn. The company 3DOps won the Early Innovator Award and the company Bellhops won the Spirit of Innovation Award.
Keynote speaker and CEO of Coyote Logistics Jeff Silver speaks Wednesday, Nov. 12, 2014, at the Chattanooga Area Chamber of Commerce's Spirit of Innovation Awards luncheon at the Chattanooga Convention Center in Chattanooga, Tenn. The company 3DOps won the Early Innovator Award and the company Bellhops won the Spirit of Innovation Award.

Fifteen months after buying Chattanooga's fastest growing startup, Coyote Logistics struck a deal Friday to be acquired by UPS for $1.8 billion.

The acquisition, which is expected to close in 30 days, is designed to help the parcel giant UPS boost its share of the burgeoning freight brokerage business.

Coyote acquired the Chattanooga-based Access America in April 2014 and employs about 250 of its 2,100 employees in Chattanooga at its sales, training and admnistrative offices in Warehouse Row in downtown Chattanooga. Managers of Coyote, including the former owners of Access America Transport who built a nearly half billion-dollar-a-year company in only a dozen years, are expected to be paid a premium for their equity in the deal.

photo UPS trucks are lined up Thursday, Dec. 26, 2013, at the UPS shipping facility in Chattanooga

About Coyote Logistics

* Founded: 2006 in Chicago* Business model: Arranges customers’ freight shipments on available trucking capacity through contracts with more than 35,000 trucking companies.* CEO: Jeff Silver* Staff: 2,100 employees* Chattanooga presence: 250 employees in Warehouse Row offices, and local training office.* History: Coyote acquired the Chattanooga-based Access America Transport in April 2014* Revenues: $2.1 billion* Ownership: Private-equity firm Warburg Pincus is selling Coyote to UPS for $1.8 billion

Coyote has helped support UPS in the past during the busy holiday season when the rush of shipments has sometimes caused delivery problems for UPS.

"The brokered full-truckload freight segment is a high growth market and we expect it will continue to outpace other transportation segments," said UPS Chief Executive Officer David Abney. "This high quality acquisition significantly increases UPS full-truckload scale and we are uniquely positioned to take advantage of exciting new revenue growth and synergy opportunities."

UPS said Friday that it expects the acquisition adding to its earnings next year. The Atlanta company anticipates the transaction could result in $100 million to $150 million in annual operating savings.

Jeff Silver, the founder and CEO of Coyote Logistics, said the company's technology and organization "will enable us to scale quickly to take full advantage of the added customers, lanes and capacity within UPS.

"It's a great day for Coyote employees, our customers and our contracted carriers," he said.

Coyote arranges customers' freight shipments on available trucking capacity contracted to members of its large carrier network, numbering more than 35,000 trucking companies. Following the acquisition and integration of Access America Transport to its network last year, Coyote added industry leading strength in flatbed serviced segments such as heavy equipment and construction.

During the peak holiday shipping season, UPS often supplements its fleet with contract transportation providers to meet customer demand. Coyote has played a growing role in supporting UPS peak operations over the past few years and the company expects to leverage Coyote's carrier network even further for this purpose in the future.

UPS has also identified revenue growth and fleet efficiency synergy opportunities by hauling shipments arranged by Coyote using existing UPS backhaul capacity within its tractor/trailer fleet.

"Through the Coyote network, UPS will provide our combined customer base with an even more seamless supply chain solutions portfolio from multi-modal freight shipments to small-package delivery," said Alan Gershenhorn, UPS executive vice president and chief commercial officer.

Coyote, which is owned by private-equity firm Warburg Pincus, booked revenue of $2.1 billion last year. The Chicago company will become a UPS subsidiary and continue to be headed by Jeff Silver.

UPS said Friday that it expects the acquisition adding to its earnings next year. The Atlanta company anticipates the transaction could result in $100 million to $150 million in annual operating savings.

For Silver, the sale of Coyote is more than 10 times bigger than the sale of his first freight startup 15 years ago for $136 million and reflects the growth in logistics, especially the freight brokerage business that pairs retailers, manufacturers and other shippers with truckers.

"We will continue to do what we have been doing, but now we will have the resources of the one of the largest logistics companies on the planet," said Mr. Silver, who will remain along with his management team under the terms of the deal with UPS.

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