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1/21/2007
INDUSTRY NEWS: Swift bought in all-cash transaction

Monday, January 21, 2007 – Swift Transportation has been bought – by its former president and CEO, Jerry Moyes.

Swift Transportation Co. officials announced Friday, Jan. 19, the merger agreement with an entity formed by Moyes, the company’s largest shareholder, a current director, and former chairman of the board and CEO of Swift.

Moyes and family members will acquire Swift in an all-cash transaction valued at approximately $2.74 billion. This includes the assumption of approximately $332 million of net debt.

“After careful consideration, and in close consultation with our financial and legal advisors, the special committee, which is composed of three of the board’s independent directors, and full board unanimously approved the transaction,” Jock Patton, chairman of the company’s board of directors, said in a company press release. “We believe the all-cash $31.55 per share price represents a fair value for the company and is in the best interest of all shareholders.”

Under the terms of the accepted agreement, Swift stockholders will receive $31.55 in cash for each outstanding share of Swift common stock. This represents approximately a 31 percent increase over the closing price of Swift stock on Nov. 3, 2006, the last trading day before Moyes made an initial proposal to acquire the company for $29 per share.

The co-founder of Swift initially offered to buy all outstanding shares of the company, and at that time offered $29 a share. That offer was $5 more per share than the stock’s trading price at that time.

According to the Phoenix Business Journal, two separate lawsuits filed by Swift shareholders contended the initial $29-dollar-a-share offer by Moyes was too low.

The Teamsters – which owns shares in the company – opposed the sale. In the lawsuit, Teamster officials questioned whether Moyes’ bid was too low and whether his influence was in the best interest of the company.

The Teamsters weren’t the only ones that questioned the offer by Moyes.

An A.G. Edwards and Sons Equity Research Recent Development Report by transportation analyst Donald Broughton downgraded Swift stock to “sell” shortly after Moyes pitched his $29 per share offer.

“We would point out that if the (original) deal is consummated, Moyes will have assumed/borrowed a total liability of about $2.15 billion or about 2.5 times tangible book value,” Broughton wrote in the report. “We believe this transaction isn't about economics, it’s about ego.”

Swift officials rejected the original proposal from Moyes.

The rejection of the initial offer was made official Nov. 27, 2006, by a special committee comprised of members of the company’s board of directors.

The deal wasn’t officially dead.

The committee members “continued to look at ways to maximize value for company shareholders … to determine if (the) initial proposed price could be increased” to reflect the full value of the company, according to a company press release following the decline of the initial Moyes’ buyout offer.

The board members weren’t the only ones thinking that way.

In the initial buyout offer, Moyes said he thought $29 per share was a fair price to offer, given that it was 21 percent per share over the stock’s trading price the day before he made his offer.

“I am prepared to consider any factors that you believe justify a higher purchase price, and, upon the completion of due diligence, I may be willing to increase my proposed price,” he wrote in his letter to Swift officials leaving the door open for further negotiations.

That apparently led to the signing of the current deal.

“Swift, which I founded in 1966 as a small company with a strong entrepreneurial spirit, has evolved into the operator of the largest truckload fleet in the United States with a dedicated and energetic team of employees, over 17,900 trucks and nearly $3.2 billion in revenues,” Moyes said.

“I am extremely pleased to have reached this agreement with Swift and look forward to building on the unique Swift legacy that has positioned the company for continued growth and success.”

Moyes received commitments from Morgan Stanley for debt financing for the transaction, according to the press release.

The transaction is subject to review by regulatory agencies, approval by Swift stockholders and other “customary” closing conditions, according to the release.

According to a Nov. 6 Securities and Exchange Filing by Moyes, he owns 27.1 percent of the outstanding shares of Swift stock.

Moyes paid $1.25 million in September 2005 to settle a case accusing him of insider trading. He had purchased nearly 190,000 shares of Swift stock just before the company reported better-than-expected earnings.

Moyes stepped down as chairman and CEO in October 2005.

The transaction is expected to be completed during the second quarter of 2007.

– By Jami Jones, senior editor
jami_jones@landlinemag.com

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