Mega carriers merge: Knight-Swift buys U.S. Xpress

A Knight has come to the rescue of U.S. Xpress, in a manner of speaking.

Knight-Swift Transportation has announced its intent to buy U.S. Xpress Enterprises

Phoenix-based Knight-Swift announced an agreement to acquire the Chattanooga, Tenn.-based mega motor carrier for $6.15 per share, about $808 million. The agreement has been approved by the Knight-Swift Board of Directors and a special committee of U.S. Xpress directors. The acquisition is expected to close in the second or early third quarter of 2023, according to a company announcement.

The U.S. Xpress brand will continue, and the company will operate separately, according to the announcement.

The acquired company’s stockholders will receive a 310% premium over the company’s closing stock price on March 20, according to the statement.

U.S. Xpress has struggled. In late 2022, it reported third-quarter losses that the company blamed on insurance claims and premiums. It announced a realignment plan in September 2022 that included layoffs and pulling the plug on its tech-centric subsidiary Variant.

A few days ago, Bloomberg reported a law firm was investigating the company on behalf of investors to see if U.S. Xpress and some of its officers or directors had “engaged in securities fraud or other unlawful practices.”

MarketWatch reports that share prices for U.S. Xpress took off upon the announcement of the company being acquired. Knight-Swift assumes the acquired company’s debt of $484 million.

Boost expected for Knight-Swift

Knight-Swift estimates that its revenue base will grow by nearly 30% from the acquisition.

Based on 2022 results, this acquisition is expected to add about $2.2 billion in total operating revenue (including $1.8 billion in truckload revenue), Knight-Swift estimates. The deal adds more than $2 billion in total operating revenue to Knight-Swift. It also adds 7,200 tractors and 14,400 trailers to Knight-Swift’s consolidated enterprise.

After the transaction, Knight-Swift’s consolidated revenue run-rate is expected to approach $10 billion, and the truckload fleet will have about 25,000 tractors and 93,000 trailers.

The positive potential for Knight-Swift stockholders in acquiring such a well-known brand is substantial, Knight-Swift CEO Dave Jackson commented in the statement. Knight-Swift will work with the management at the acquired company to achieve the same performance levels as its other truckload businesses, he said. Management will work to leverage economies of scale and increase freight network efficiencies.

“Moreover, this transaction will not slow down the geographic expansion of our LTL network or our other growth initiatives, as our financial and other resources remain significant,” Jackson said.

U.S. Xpress’s chief executive said his company was pleased to deliver near-term liquidity to its stockholders at a significant premium.

“The increased scale, operating expertise and resources of the combined entity will allow U.S. Xpress to pursue new levels of service and efficiency. 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.” U.S. Xpress CEO Eric Fuller said in the Knight-Swift announcement.

In 2017, Knight Transportation (founded in 1990) merged with Swift Transportation (founded in 1966) to create Knight-Swift Transportation Holdings Inc.

U.S. Xpress was founded in 1985. LL

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