(Reuters) -United Parcel Service, the world's biggest package delivery firm, will sell its Coyote Logistics business unit to RXO for $1.025 billion, the companies said on Sunday.

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, North Carolina-based RXO said in a statement.

"The decision to sell our Coyote Logistics business allows an even greater focus on our core business," UPS Chief Executive Officer Carol Tome said.

RXO helps shippers and carriers to move freight.

UPS bought Coyote Logistics from private equity firm Warburg Pincus for $1.8 billion in 2015 to expand its full-truckload services.