(FROM THE WALL STREET JOURNAL 8/1/15) 
   By Laura Stevens and Paul Page 

United Parcel Service Inc. has agreed to buy Coyote Logistics LLC for $1.8 billion, looking to expand in the burgeoning freight-brokerage business and get a better handle on the peak holiday shipping season.

UPS, which is acquiring the shipping-services provider from private-equity firm Warburg Pincus LLC, said Friday it expects the addition to start contributing to earnings next year, eventually pitching in $100 million to $150 million.

UPS has been contracting with Chicago-based Coyote since 2012 to find extra truck space for the growing flood of holiday e-commerce, UPS Chief Commercial Officer Alan Gershenhorn said in an interview. The delivery giant has been working on reducing costs after tough back-to-back holiday seasons damped profit.

A prized addition to UPS's portfolio will be Coyote's proprietary technology, Mr. Gershenhorn said. The company will use it to make better use of its fleet of trucks, some of which drive empty between warehouses or package-sorting hubs on return trips. Filling that space should boost efficiency and revenue. UPS will also offer its customers use of the technology to fill out their own trucks.

Founded in 2006, Coyote was an early entrant into a new world of freight that used the promise of combining technology and analytics to win the business of retailers and manufacturers.

Founder Jeff Silver said Coyote hires young employees with no experience in transportation and trains them on an electronic platform that connects brokers and customers. The software helps spot where shipping needs of customers overlap, allowing brokers to find space on trucks more easily and to offer cheaper prices in buying the capacity, Mr. Silver said.

"We become a network integrator for our customers," he said. "It gets us out of the role of just being a traditional broker."

Coyote's technology has helped it rise quickly in a competitive, yet highly fragmented, market. The company booked $2.1 billion in revenue last year, according to UPS. According to Armstrong & Associates, a research firm, Coyote ranks 17th by revenue among third-party logistics providers, a wider universe of companies that also includes freight brokers. UPS Supply Chain Solutions ranked fourth with $5.76 billion in revenue, though it had largely steered clear of freight brokering before Friday's deal.

In a separate matter, UPS rival FedEx Corp. hit a bump with its planned acquisition of TNT Express NV. The European Commission on Friday opened an in-depth investigation into Fedex's nearly $5 billion deal for the Dutch delivery company, saying it was concerned about the merged company's dominance in international delivery in some markets.

The regulator said it would take until early December to decide whether it will approve the deal or ask for concessions to ease its concerns. The two other large international delivery companies, UPS and DHL Worldwide Express Inc., may not provide sufficient competition to the merged company, the antitrust watchdog said.

On its earnings call in June, FedEx executives said they did "not believe that the transaction faces any competition issues for the Commission." A similar attempt to acquire TNT by UPS collapsed in 2013 when it failed to satisfy European regulators.

TNT Express said in a release that the extended review by the European Commission is customary. Analysts said the review wasn't surprising and had been largely expected by the market.

FedEx said it continues to make progress on regulatory steps, which would allow it to complete the transaction in the first half of 2016. "We will continue to work together with TNT Express to meet the European Commission's need for additional due diligence and are confident that the combination of both companies will increase competition and create benefits for customers," said Patrick Fitzgerald, senior vice president integrated marketing and communications at FedEx.

As delivery companies look for growth, third-party logistics providers like Coyote are becoming more attractive. Revenue from those U.S. logistics providers rose 7.4% to $157.2 billion last year, faster than the 2.8% growth in logistics spending overall, according to research firm Armstrong & Associates.

FedEx acquired logistics company GENCO Distribution System Inc., a company that specializes in product returns, for $1.4 billion earlier this year.

Europe has also become increasingly attractive for growth. UPS has said it is doubling its investment there to nearly $2 billion over five years, while XPO Logistics Inc. earlier this year said it was purchasing French contract-logistics firm Norbert Dentressangle SA in a deal valued at $3.53 billion.

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Gabriele Steinhauser contributed to this article.

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