U.S. Xpress Enterprises told investors it agreed to a $808 million takeover by Knight-Swift Transportation Holdings, sending its share 300% higher shortly after the market opened.
The Chattanooga-based trucking company said the $6.15 per share deal has been approved by Knight-Swift’s board of directors of Knight-Swift as well as a special committee of its own independent directors and is expected to close late in the second quarter or early third quarter of 2023, subject to customary closing conditions.
The transaction is at a 310% premium over the U.S. Xpress closing stock price on March 20. Its shares traded at $5.99 by 11am in New York while Knight-Swift's shares were 5.6% higher at $56.08.
“We are very pleased to deliver to our stockholders the opportunity for near-term liquidity at a significant premium. Additionally, joining the Knight-Swift team is an exciting opportunity for our people, our customers, and the Chattanooga and other communities we call home,” U.S. Xpress CEO Eric Fuller said in a statement. “
“The increased scale, operating expertise and resources of the combined entity will allow U.S. Xpress to pursue new levels of service and efficiency,” Fuller added. “We’re delighted that U.S. Xpress will continue to operate as an independent brand and will do so with the support and partnership of one of North America’s strongest transportation companies.”
Improved revenue run rate
Based on its 2022 results, Knight-Swift estimated that U.S. Xpress will add approximately $2.2 billion in total operating revenue (including $1.8 billion in truckload revenue), 7,200 tractors, and 14,400 trailers to its consolidated enterprise.
After the transaction, Knight-Swift’s consolidated revenue run rate is expected to approach $10 billion, while the truckload fleet will have approximately 25,000 tractors and 93,000 trailers.
“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. “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. Although it will take time, particularly given the current freight environment, we would not have pursued the transaction unless we were confident in achieving our return thresholds within a few years.”
The U.S. Xpress brand and separate operations will continue, the companies added.
Contact the author at stephen.gunnion@proactiveinvestors.com