Consolidation of the U.S. trucking industry continues, with two of the biggest operators -- Swift Transportation Co. (SWFT) and Knight Transportation Inc.(KNX) -- expected to announce today that they will merge in an all-stock deal, The Wall Street Journal reported. (See also, Truckers Need NAFTA to Rally in 2017.)
The move comes amid slumping freight demand and a decline in industry profits over the past 18 months.
The transaction is said to value Swift shares at $22.07 a piece, around a 10% premium on its Friday closing price of $20.02 per share. The combination will create a $5 billion behemoth and will make the transaction the largest yet seen in the U.S. trucking sector, beating XPO Logistics’ $3 billion purchase of Con-way Freight in 2015. (See also, How To Analyze The Transportation Industry.)
In a reverse stock split, Swift shareholders will get 0.72 share of a new company in exchange for each Swift share, while Knight stock holders will exchange on a one-for-one basis. Former Swift shareholders will then own 54% of the newly formed company with the remaining 46% held by former Knight investors.
Despite sluggish performance from the American trucking sector in recent times, one of the largest trucking companies, Schneider National Inc. (SNDR), managed to list its IPO successfully last week, valuing the company at $3.3 billion at a price of $19 per share. (For more, see Schneider National Will Begin Trading Today.)