Today the biggest got even bigger following a blockbuster mega-merger in the $332 billion truckload market.
Phoenix-based Knight-Swift Transportation, already the biggest player in the TL market at $4.5 billion revenue last year, is buying Chattanooga, Tenn.-based U.S. Xpress, which ranked ninth in TL revenue last year at $2.2 billion. The deal is valued at $808 million, including assumption of $484 million of debt.
Knight-Swift said the transaction has been unanimously approved by its board and a special committee of the independent directors of the U.S. Xpress board. It is expected to close late in the second quarter or early third quarter this year, subject to customary closing conditions.
The deal will boost Knight-Swift’s revenue base by nearly 30%. Knight-Swift management said it expects a “high-80s” adjusted operating ratio and mid-teens return on invested capital for U.S. Xpress by 2026.
U.S. Xpress stockholders are in for a nice payday. They are to receive 310% premium over U.S. Xpress’ closing stock price on March 20.
U.S. Xpress brand and separate operations will continue under new ownership. Knight-Swift said its growth and diversification strategy remains “intact,” with low leverage and strong cash flows to support its ongoing national LTL build-out and full range of capital allocation alternatives.
“The opportunity to add one of the largest and most well-known brands in our industry, with significant opportunity to improve earnings, gain customers and reach more professional drivers, was very compelling to us,” Knight-Swift CEO Dave Jackson said in a statement.
“We expect to apply the same playbook that proved successful in the Knight-Swift merger as we share best practices, improve operations and work together to help U.S. Xpress become the best that it can be,” Jackson said of that merger of TL giants that occurred in 2017.
