US trucking giants merge
TWO OF THE UNITED STATES’ BIGGEST TRUCKING companies, Knight Transportation and Swift Transportation, are merging into a $US6billion ($NZ8.58bn) super-operator.
Analysts say it’s the biggest deal in US trucking history, creating North America’s biggest truckload transportation company, worth $US6billion and generating $5bn in annual revenue.
Both businesses are based in Phoenix, Arizona, and their founders – Kevin Knight and Swift’s Jerry Moyes – are close friends. In fact, Knight began his career with Swift.
e eets will each continue to operate under their existing names and brands, but will be owned by a new holding company, which will also be headquartered in Phoenix.
It will own around 23,000 tractors units, and 77,000 trailers, and employ 28,000 sta .
Kevin Knight, who will become executive chairman of the combined business, “is known as one of, if not THE best operator in the truckload industry,” says Stifel Financial logistics analyst John Larkin in a report to investors.
And Larkin adds: “E ectively, this deal represents the pupil acquiring the teacher’s company and will give the Knight team control of the new entity.”
e analyst says that Swift has struggled since Moyes retired late last year. e son of a truck driver, he founded the company in 1966 and is described by Larkin as its “spiritual leader.”
Larkin has told investors that he believes that Knight “will add some operating discipline and strategic direction to the Swift organisation.”
e deal will allow both companies to compete with industry giant Schneider National, which raised $US550million in its initial public share o ering days before the Knight/Swift deal was announced.
Although the companies say that the deal is a merger, Knight is legally acquiring Swift and its shareholders will have 54% of the merged company.
But Moyes, the controlling shareholder of Swift, will remain the single biggest shareholder in the merged company, owning about 24% of it.
“I cannot think of a better combination,” Moyes says: “ e 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 pro tability.
“I’m con dent that we have the right approach to maximising the contribution of both teams, and I look forward to helping the KnightSwift leadership team in any way I can to continue the legacy of both great companies.”
Knight executive chairman Kevin Knight says that the merger discussions had four goals: “Create a company with the best strategic position in our industry; identify signi cant realisable synergies that would create value for both sets of stockholders; create a business that over the longterm will operate at Knight’s historical margins and nancial returns; and agree on a leadership and corporate governance framework that will bene t all stakeholders. I’m con dent we have achieved those goals.”
Swift Transportation has a eet of about 18,000 trucks, driven by company and third-party drivers, and it operates more than 40 trucking terminals in the US and Mexico.
Knight Transportation has about 5000 employees and operates a eet of more than 4000 trucks.