The two Phoenix-based trucking giants said Monday the transaction to create Knight-Swift Transportation Holdings Inc., the industry’s largest full truckload company, is expected to close in the third quarter of 2017.
Two Phoenix-based trucking giants, Swift Transportation and Knight Transportation, will merge operations through an all-stock transaction that will create the industry’s largest full truckload company.
The two companies said Monday their boards of directors unanimously approved the merger, which will create Knight-Swift Transportation Holdings Inc.
The holding company structure will allow Swift and Knight to operate under common ownership and share best practices, while maintaining distinct brands and operations, the companies said.
Knight-Swift Transportation will be headquartered in Phoenix, and the transaction is expected to close in the third quarter of 2017. The company will then operate with approximately 23,000 tractors, 77,000 trailers and 28,000 employees.
The transaction is still subject to customary conditions, including the approval of Knight and Swift stockholders, as well as antitrust approvals.
“The combination is announced in the aftermath of the completion of the Schneider IPO last week and 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, Wis.,” investment bank and analyst Stifel said.
Under the terms of the definitive agreement, each Swift share will convert into 0.72 shares of Knight-Swift by means of a reverse stock split, and each share of Knight will be exchanged for one Knight-Swift share.
Based on the $30.65 closing price of Knight shares on Friday, the implied value per share of Swift is $22.07. Based on Knight’s closing share price on Friday, the number of combined company shares expected to be outstanding after closing and the combined net debt of Swift and Knight as of Dec. 31, 2016, the combined company would have an implied enterprise value of about $6 billion.
“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 $15 million in the second half of 2017, $100 million in 2018, and $150 million in 2019,” the companies said.
Upon closing of the transaction, Swift stockholders will own approximately 54 percent on the combined company, while Knight stockholders will own around 46 percent.
Post closing, Knight-Swift Transportation expects to pay its stockholders quarterly dividends of $0.06 per share.
The merged company is expected to have around 176.1 million shares outstanding and 178.9 million shares on a fully diluted basis, following the close of the transaction.
The board of directors in Knight-Swift Transportation will comprise all Knight directors and four current Swift directors. Kevin Knight will serve as the board’s executive chairman, while Gary Knight will serve as vice chairman.
The executive team of Knight-Swift will be led by Kevin Knight as executive chairman, Dave Jackson as chief executive officer, and Adam Miller as Chief Financial Officer.
“In Knight’s 26-year history, we have built a truckload company with industry leading margins and investment returns,” Knight CEO Dave Jackson said. “When the two companies began discussions, we had four goals in mind: create a company with the best strategic position in our industry; identify significant realizable synergies that would create value for both sets of stockholders; create a business that over the long-term will operate at Knight’s historical margins and financial returns; and agree on a leadership and corporate governance framework that will benefit all stakeholders. I am confident we have achieved those goals.”
NEWS FLASH: Swift, Knight to merge
