Subscribe to our free, weekly email newsletter!


Knight Transportation “disappointed” in rebuff of $242 million offer for USA Truck

By John D. Schulz, Contributing Editor
October 01, 2013

Phoenix-based Knight Transportation, one of the top and most profitable truckload companies, says it is “disappointed” that USA Truck has rejected Knight’s $9 per share, all cash offer to take over the financially ailing Van Buren, Ark.-based truckload carrier.
   
The offer was for $95 million in equity, plus assumption of $147 million in USA Truck debt, making the total enterprise value of the failed bid $242 million. That would be one of the largest rejections of a purchase of a publicly held truckload carrier since the Great Recession began in 2008.
 
The Knight-USA combination would have been the largest TL acquisition since Con-way Inc. bought Contract Freighters Inc. in 2007.
 
“We are disappointed that USA Truck has once again rejected Knight’s all-cash, premium proposal,” Knight Transportation said in a statement.
 
Knight added that since making its proposal public, it held discussions with “several” of USA Truck’s largest shareholders that have indicated their support for its proposal. Knight said based on those conversations, it took the necessary steps to acquire USA Truck.
 
“We continue to believe that a combination of Knight and USA Truck is better positioned to deliver value for and is in the best interest of all of Knight and USA Truck’s stakeholders, and we are prepared to take the necessary steps to make this combination a reality,” Knight added in its statement.
 
Rapidly growing Knight Transportation ranks as the nation’s sixth-largest TL carrier, solidly profitable with revenue growth of 8.1 percent last year to $936 million. It is expected to exceed $1 billion in revenue this year, joining Schneider, Swift, U.S. Xpress, Werner Enterprises and Landstar in the $1 billion TL club.
 
USA is large, but not profitable. It ranked as the nation’s 29th largest TL carrier with a revenue decline of 7.4 percent last year to $297.6 million, from $321.3 million in 2012. It operates about 2,100 power units.
 
Knight, which has consistently posted operating ratios in the low to mid-80s, has an operating philosophy of buying smaller TL carriers as a “tuck-in” acquisition theory. It basically does this on a regional basis, acquiring key customers and quality drivers in the process to help it build freight density in east-west traffic lanes.

Knight already owns approximately 11.3 percent of USA Truck’s shares outstanding, according to a Sept. 26 Securities and Exchange Commission filing. The $9 per share cash offer represented what Knight called “a significant premium” of approximately 39 percent to USA Truck’s closing price on Sept. 25, the last trading day before its offer was made public.
 
USA Truck said that it is still open to all strategic options. It said it was open to further talks with Knight Transportation. But USA added that it still feels that moving forward as a stand-alone company with its strategic plan is the best way to provide value to its shareholders.

About the Author

image
John D. Schulz
Contributing Editor

John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. He is known to own the fattest Rolodex in the business, and is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis. This wise Washington owl has performed and produced at some of the highest levels of journalism in his 40-year career, mostly as a Washington newsman.


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

When railroads are doing business with a larger than large customer like UPS, it stands to reason, it can often be the best, and worst, of both worlds, depending on how things are going. That was one of the main takeaways from a presentation by UPS Vice President of Corporate Transportation Services Ken Buenker at this year’s RailTrends conference in New York.

While many market conditions are working against shippers, the most recent edition of the Shippers Condition Index (SCI) from freight transportation consultancy FTR shows that things may be improving, albeit slowly.

Newsroom Notes takes a look at some of the biggest stories and themes in logistics for 2014.

Even though China’s costs have risen and the U.S. has now surpassed Mexico as the preferred locale for relocating offshored manufacturing, advantages can be fleeting and the challenges great

Memphis-based FedEx reported solid fiscal second quarter earnings results today. Quarterly net income of $616 million was up 23 percent annually, and revenue, at $11.9 billion, was up 5 percent. Operating income at $1.01 billion was up 22 percent.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA