United Parcel Service (UPS), the world’s largest package delivery company, announced on Sunday that it will sell its Coyote Logistics business unit to RXO for $1.025 billion. This strategic move is intended to allow UPS to concentrate more on its core business operations.

The transaction will be financed through a combination of equity and debt. RXO, based in North Carolina, disclosed that the funding will include a $300 million equity investment from MFN Partners and a $250 million equity investment from Orbis Investments.

UPS Chief Executive Officer Carol Tomé stated, “The decision to sell our Coyote Logistics business allows an even greater focus on our core business.” This remark underscores UPS’s strategy to streamline its operations and enhance efficiency in its primary areas of service.

RXO specializes in assisting shippers and carriers in the movement of freight, leveraging technology and logistics expertise to optimize supply chain operations. The acquisition of Coyote Logistics is expected to bolster RXO’s capabilities and market presence in the logistics industry.

UPS acquired Coyote Logistics from private equity firm Warburg Pincus for $1.8 billion in 2015. The purchase was part of UPS’s strategy to enhance its full-truckload services and expand its logistics and supply chain solutions. However, the current sale aligns with UPS’s renewed focus on its core competencies and strategic business areas.

Coyote Logistics, headquartered in Chicago, is known for providing comprehensive transportation and logistics solutions, including truckload, less-than-truckload (LTL), and intermodal services. Since its acquisition by UPS, Coyote has been a significant component of UPS’s logistics and freight operations.

However, the logistics landscape has evolved, and UPS has been adapting to changing market conditions and customer needs.

For UPS, the proceeds from the sale will likely be reinvested into its core delivery services, technology upgrades, and other strategic initiatives aimed at enhancing operational efficiency and customer service.