* 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
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)