Knight Transportation acquires Barr-Nunn Transportation

Phoenix-based Knight Transportation, one of the top and most profitable truckload companies said this week it has acquired Barr-Nunn Transportation, a dry van truckload carrier based near Des Moines, Iowa.

The purchase price was $112.4 million. Barr-Nunn generated approximately $119.8 million in total revenue ($99.2 million excluding fuel surcharge), $26.0 million in earnings before interest, taxes, depreciation, and amortization (’‘EBITDA’‘) and $14.9 million in operating income for the last twelve months ending August 31, 2014.

Established in 1982 by the Sturgeon family, Barr-Nunn operates as a dry van truckload operator. According to its corporate Web site, it has 550 tractors and 1,830 trailers and serves manufacturers and users of consumer products, paper products, food products and ingredients, plastic and rubber building materials, appliances, hardware, castings, and animal feeds, among other products.

In a letter to customers, Jim Updike, executive vice president sales and marketing for Knight, said that bringing Barr-Nunn into the fold will enable Knight to expand through a safe and service-sensitive company and afford Barr-Nunn access to substantial capital resources for growth.

“Barr-Nunn has a strong niche in the expedited and highly scheduled marketplace, as well as a substantial presence in most eastern markets,” stated Updike. “Barr-Nunn will continue to operate as a separate company under its existing operating authority with its customer contracts and agreements remaining in effect.”

Barr-Nunn will remain the Des Moines, Iowa area, and its senior management team has agreed to remain in their leadership positions, according to Knight officials. The company also has leased facilities located in Ohio, Pennsylvania, and North Carolina and its main operating territory is the eastern United States, said Knight.

Cowen and Company analyst Jason Seidl wrote in a research note that while Knight will likely see some tax benefits and share its best practices with Barr-Nunn, the deal does not appear to target big cost synergies, and is not a turn-around acquisition.

“[Knight] has identified a well-run business and decided to take it under its belt while keeping its operations unchanged,” he wrote. “Although some investors may have hoped for a bigger transaction that would target cost and revenue synergies, such synergies would have likely meant that KNX’s hands would be tied for several quarters implementing operational and structural changes. Instead, with the Barr-Nunn acquisition, little effort is required from KNX, which should enable it to continue to look for additional acquisition opportunities. We continue to believe that the freight environment remains ripe for M&A activity and would not be surprised if KNX carried out another modest acquisition in the not-too-distant future.”