Carriers merge to form a $6 billion company

Knight Transportation and Swift Transportation have agreed to merge their Phoenix-based trucking companies in an all-stock deal expected to close in the third quarter of 2017. With a combined value of $6 billion, the carriers will form a new company, Knight-Swift Transportation Holdings, according to a news release.

“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 release shows. “The company will remain headquartered in Phoenix, operating with approximately 23,000 tractors, 77,000 trailers and 28,000 employees.”

Baird transportation analysts Benjamin Hartford and Zax Rosenberg viewed the deal as positive: “Swift brings scale in both truckload and intermodal, while Knight brings a long history of best-in-class operational performance.”

In the deal, each Swift share will convert into 0.72 shares of the new company at an implied share price of $22.07, while each Knight share will become one share in the new company, according to the Baird analysts.

“Swift would own 54% of the new entity. Knight the remaining 46%,” according to John Larkin, transportation analyst for Stifel. “Swift shareholders effectively receive about a 10% premium for their shares.”

The new company’s board of directors will include all Knight directors, with Kevin Knight as executive chairman, and four Swift directors, with two of the directors chosen by the Jerry Moyes family. “Effectively, this deal represents the pupil acquiring the teacher’s company and will give the Knight team control of the new entity,” Larkin wrote in his company update. “Swift appears to have struggled with the retirement of its founder and spiritual leader, Jerry Moyes.”

Along with Kevin Knight, other members of the executive leadership team will include Dave Jackson as CEO and Adam Miller as chief financial officer.