12:23 PM EDT, 06/24/2024 (MT Newswires) -- (Updates with stock price movement in the headline and the first paragraph.)

RXO (RXO) shares soared more than 23% in recent Monday trading after it struck a deal to acquire United Parcel Service's ( UPS ) freight brokerage business unit, Coyote Logistics, for about $1.03 billion in cash.

The deal is expected to be completed by the end of 2024, subject to regulatory approval.

RXO plans to fund the transaction through a combination of equity and debt, including a $300 million equity investment from MFN Partners and a $250 million equity investment from Orbis Investments.

RXO anticipates the acquisition to be immediately and "significantly" accretive to its adjusted EPS and adjusted free cash flow, and expects annualized cost synergies of at least $25 million. The company will continue to serve UPS' brokered transportation needs until January 2030.

UPS said it will update its financial outlook once the transaction is completed. RXO maintained its Q2 adjusted EBITDA guidance range of $24 million to $30 million.

Price: 137.71, Change: +0.03, Percent Change: +0.02