PHOENIX — Knight Transportation and Swift Transportation Co. Monday said their boards of directors have unanimously approved a merger of Knight and Swift in an all-stock transaction that will create the industry's largest full truckload company.
The combined company will be named Knight-Swift Transportation Holdings Inc. (“Knight-Swift”) and will trade under the ticker “KNX.”
The top four members of the leadership team for the new organization were executives at Knight Transportation.
This transaction combines under common ownership two long-standing industry leaders creating North America’s largest truckload transportation company with $5 billion in annual revenue and a “Top 5” truckload presence in dry van, refrigerated, dedicated, cross-border Mexico and Canada, and a significant presence in brokerage and intermodal, according to a statement issued by the two carriers.
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 company will remain headquartered in Phoenix, where both are currently located, operating with approximately 23,000 tractors, 77,000 trailers and 28,000 employees.
Knight-Swift’s board of directors will consist of all of Knight’s directors and four of Swift’s. Jerry Moyes, founder of Swift, will serve as a non-employee director and senior advisor to the executive chairman and vice chairman. Moyes’ family will own approximately 24 percent of the company.
The leadership team will consist of Kevin Knight, executive chairman; Gary Knight, vice chairman; David Jackson, CEO; and Adam Miller, CFO; the positions are the same as the four held at Knight Transportation.
Richard Stocking, CEO of Swift, and Ginnie Henkels, chief financial officer of Swift, have chosen to pursue other opportunities following the closing of the transaction, according to a statement by the new company.
In the interim, both Stocking and Henkels will continue to lead Swift to ensure a smooth transition.
Under the terms of the definitive agreement each Swift share will convert into 0.72 shares of Knight-Swift by means of a reverse stock split. Each share of Knight will be exchanged for one Knight-Swift share.
Based on the $30.65 closing price of Knight shares on April 7, 2017, the last trading day prior to the announcement, the implied value per share of Swift is $22.07. Upon closing of the transaction, Swift stockholders will own approximately 54 percent and Knight stockholders will own approximately 46 percent of the combined company. Based on Knight’s closing share price on April 7, 2017, the number of combined company shares expected to be outstanding after closing and the combined net debt of Swift and Knight as of December 31, 2016, the combined company would have an implied enterprise value of approximately $6 billion.
Knight is expected to be the accounting acquirer, and the transaction is expected to be accretive to adjusted earnings per share (“Adjusted EPS”) with expected pre-tax synergies of approximately $15 million in the second half of 2017, $100 million in 2018, and $150 million in 2019.
“In Knight’s 26-year history, we have built a truckload company with industry leading margins and investment returns,” said Kevin Knight. “When the two companies began discussions, we had four goals in mind: create a company with the best strategic position in our industry; identify significant realizable synergies that would create value for both sets of stockholders; create a business that over the long-term will operate at Knight's historical margins and financial returns; and agree on a leadership and corporate governance framework that will benefit all stakeholders. I am confident we have achieved those goals.”
Stocking said he was proud of all Swift has accomplished and that it will be a significant part of this new venture, which brings together the most “robust, respected and reliable truckload providers in North America. I am especially proud of the fact that both companies will remain devoted to delivering a better life to employees, customers, and communities. Throughout this transition, I encourage everyone to work together to continue building the Swift brand.”