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UPDATE 4-U.S. trucking companies Swift and Knight to merge

* Deal to create biggest truckload operator in North America

* Swift shareholders to own 54 pct of new entity

* Knight shareholders to own the rest

* Combined market value $5.12 bln (Adds Breakingviews link, closing share prices)

By Rachit Vats and Ankit Ajmera

April 10 Trucking and logistics operators Swift Transportation Co and Knight Transportation Inc are merging in a stock-swap deal, creating a company with a market value of more than $5 billion.

The merger, which combines Swift's scale with Knight's operational prowess, will give the new entity more muscle to operate in an industry struggling with excess capacity that has hurt prices and squeezed profits.

Shareholders of Swift will own 54 percent of the new entity and Knight shareholders the rest after the deal closes.

The companies, both based in Phoenix, have a shared history - Jerry Moyes started Swift in 1966, while Randy Knight, who was a part-owner of Swift - founded Knight Transportation along with three cousins in 1990.

Knight's executive chairman, Kevin Knight, will assume the same title at the new company. Moyes, who retired as co-CEO of Swift last year, will become one of the directors of the new company. The Jerry Moyes family, however, will own about 24 percent of Knight-Swift.

"Effectively, this deal represents the pupil acquiring the teacher's company and will give the Knight team control of the new entity," Stifel Transportation & Logistics Research Group analyst John Larkin said in a note.

"Swift appears to have struggled with the retirement of its founder and spiritual leader, Jerry Moyes. ... Kevin Knight will be in a strong position to provide strategic leadership of the combined entity."

Baird Equity Research analyst Benjamin Hartford said the deal combines Swift's scale in both truckload and intermodal and Knight's industry-leading operating margins and capital returns.

The deal, which would create the biggest truckload operator in North America, came days after rival Schneider National Inc went public in an IPO that raised about $550 million.

Under the deal, each Swift share will be converted into 0.72 shares of the new company through a reverse stock split. Each Knight share will be exchanged for one share of the new company.

The transaction values each Swift share at $22.07, a 10 percent premium to its closing price on Friday.

Swift's shares closed 23.7 percent higher at $24.77, while Knight was up 13.4 percent at $34.75.

"I cannot think of a better combination. The Knight and Moyes families grew up together, and the Knights helped me build Swift before starting their own company and making it an industry leader in growth and profitability," Moyes said.

The Wall Street Journal first reported the deal.

(Reporting by Rachit Vats and Rama Venkat Raman in Bengaluru; Editing by Amrutha Gayathri and Saumyadeb Chakrabarty)

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