The boards of directors of Knight Transportation and Swift Transportation struck an all-stock merger of the two companies, creating the largest all truckload carrier in the U.S.
The deal was announced in a joint press release issued by the two motor carriers on Monday, April 10. The merger lands Knight-Swift firmly in the top five largest for hire motor carriers, trailing UPS, FedEx, XPO and J.B. Hunt.
The two companies combined have a revenue of $5.1 billion, roughly $1.1 billion less than J.B. Hunt. However, according to the press release, the merged Knight-Swift operation will continue to focus on full truckload freight, as opposed to J.B. Hunt’s more diversified operations including less-than-truckload and intermodal freight. Thus, it will be the largest for-hire truckload carrier in the U.S.
“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 merger press release stated. “The company will remain headquartered in Phoenix, Ariz., operating with approximately 23,000 tractors, 77,000 trailers, and 28,000 employees.”
The all-stock deal means that Knight stockholders will get one Knight-Swift share for each share of Knight stock they held. Swift stockholders will get 0.72 shares of Knight-Swift stock for each share of Swift they held before the merger.
The value of the stock shares was based on close of trading on Friday, April 7.
At that time Knight shares closed at $30.65 and Swift closed at $20.02 per share, according to Nasdaq.com. Swift’s implied value, or what it’s expected to be following the announcement of the merger, was reported in the press release at $22.07. The merged Knight-Swift leadership expects to pay quarterly dividends of 6 cents per share following the merger.
The makeup of the board of directors and management team will be split between Knight and Swift operations. However, chairman of the board and company executive seats will be taken by Knight Transportation individuals.
Of course, Swift founder Jerry Moyes will be on the board, along with three other Swift representatives. The remaining 10 board seats will be filled by the current members of the Knight Transportation Board of Directors.
Day-to-day operations will be run by Executive Chairman Kevin Knight and CEO Dave Jackson, both of Knight Transportation.
The deal hinges on a final vote by Swift and Knight shareholders. The Jerry Moyes family, which owns 56 percent Swift stock, and the Knight family, who hold approximately 10 percent of the Knight stock, all agree to vote in favor of the merger.