Knight and Swift to merge

by Heavy Duty Trucking|Today's Trucking partner

Swift Transportation Co. and Knight Transportation Inc. announced on April 10 that they will merge via a stock swap to form a new company, Knight-Swift Transportation, according to published reports.

The deal would combine two of the largest players in trucking in a business valued at over US $5 billion.

The two Phoenix-based carriers will be operated as distinct brands, according to a news report posted by The Wall Street Journal.

Under the terms of the agreement, each Swift share will convert into 0.72 shares of Knight-Swift by means of a reverse stock split, explained a Reuters news story, while each Knight share will be exchanged for one Knight-Swift share.

Reuters reported that the merger values each Swift share at $22.07, which is a 10% premium to its closing price on Friday. Once the deal is closed, Swift stockholders will own about 54% and Knight stockholders approximately 46% of the combined company.

The Swift-Knight deal will outweigh the purchase of Con-way by XPO Logistics as the largest acquisition in trucking.

“[Swift fiounder] Jerry Moyes will serve on the board of the combined entity and will be allowed to name another board member,” according to an April 10 analyst update released by Stifel. “Up to 10 board members will come from the current Knight Board. Effectively, this deal represents the pupil acquiring the teacher’s company [Knight founder Kevin Knight launched his career at Swift] and will give the Knight team control of the new entity.”

Stifel also observed that “Swift appears to have struggled with the retirement of its founder and spiritual leader, Jerry Moyes. Former Chief Operating Officer Kevin Knight will be in a strong position to provide strategic leadership of the combined entity. Mr. Knight is known as one of if not the best operator in the truckload industry and we believe [he] will add some operating discipline and strategic direction to the Swift organization.”

Given that the merger is being announced right after completion of the Schneider IPO last week, Stifel added that it “may be designed to allow the combined company an opportunity to better compete with its newly financially invigorated, big orange perpetual motion machine from Green Bay, Wisconsin.”

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