Knight Transportation and Swift Transportation have announced that their boards of directors have unanimously approved a merger of the companies in an all-stock transaction that will create the largest full truckload company in North America. The combined company will be named Knight-Swift Transportation Holdings Inc., and will trade under the ticker “KNX.”
This transaction will create a truckload transportation company with $5bn in annual revenue and a “Top 5” truckload presence in the dry van, refrigerated, dedicated and cross-border segments, and a significant presence in brokerage and intermodal. The holding company structure will enable the Knight and Swift businesses to operate under common ownership and share best practices while maintaining distinct brands and operations. The company will remain headquartered in Phoenix, Arizona operating with approximately 23,000 tractors, 77,000 trailers, and 28,000 employees.
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. Each share of Knight will be exchanged for one Knight-Swift share. Based on the $30.65 closing price of Knight shares on April 7, 2017, the last trading day prior to the announcement, the implied value per share of Swift is $22.07. Upon closing of the transaction, Swift stockholders will own approximately 54% and Knight stockholders will own approximately 46% of the combined company. Based on Knight’s closing share price on April 7, 2017, the number of combined company shares expected to be outstanding after closing and the combined net debt of Swift and Knight as of December 31, 2016, the combined company would have an implied enterprise value of approximately $6bn.
Knight is expected to be the accounting acquirer, and the transaction is expected to be accretive to adjusted earnings per share (“Adjusted EPS”) with expected pre-tax synergies of approximately $15m in the second half of 2017, $100m in 2018, and $150m in 2019.
Knight Chief Executive Officer, Dave Jackson, added: “Under this ownership structure, we will be able to operate our distinct brands independently with experienced leadership in place. We look forward to learning from each other’s best practices as we seek to be the most efficient company in the industry. We are dedicated to a seamless transition and ensuring continuity for our customers and professional Driving Associates.”
Source: Knight Transportation
