Knight-Swift Transportation to acquire US Xpress Enterprises

For a total enterprise value of $808 million USD, Knight-Swift will acquire US Xpress.

For a total enterprise value of $808 million USD, Knight-Swift will acquire US Xpress.

The transaction has been unanimously approved by the Board of Directors of Knight-Swift and a Special Committee of the independent directors of the US Xpress Board of Directors. It is expected to close late in the second quarter or early third quarter of 2023, subject to customary closing conditions.

“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,” said Knight-Swift CEO, Dave Jackson.

“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 US 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. Beyond that, we will continue to work with the US Xpress team in pursuit of the performance levels of our other truckload businesses over the next several years, so the opportunity for our stockholders is substantial.

“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.”

US Xpress CEO, Eric Fuller, said: “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. The increased scale, operating expertise and resources of the combined entity will allow US Xpress to pursue new levels of service and efficiency. We’re delighted that US 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.”

John Rickel, Lead Independent Director and Chair of the US Xpress Special Committee, said: “The Special Committee evaluated the transaction against the company’s standalone prospects and current macroeconomic environment and unanimously determined that the compelling and certain cash consideration is in the best interest of all US Xpress stakeholders and maximises value for its stockholders. Knight-Swift is a proven operator with a strong track record in the industry, and we are confident this transaction is the best path forward for US Xpress.”

Based on 2022 results, US Xpress is expected to add approximately $2.2 billion USD in total operating revenue (including $1.8 billion USD in truckload revenue), 7,200 prime movers, 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 USD, while the truckload fleet will have approximately 25,000 prime movers and 93,000 trailers.

For 2022, US Xpress total revenue comprised approximately 36 per cent dedicated truckload, 34 per cent US Xpress Inc. irregular route truckload, 14 per cent Total Transportation of Mississippi irregular route truckload, and 16 per cent brokerage. Portions of the US Xpress business are reported to be performing reasonably well, such as the Total Transportation subsidiary, while the most underperforming irregular route business unit matches up well with Knight-Swift’s strengths.

Knight-Swift operates one of the largest asset-based truckload fleets in North America while delivering leading profitability.

The truckload business generates most of the capital Knight-Swift deploys for growth, diversification, and returning capital to shareholders, such as the $1.5 billion USD invested in acquisitions in the less-than-truckload sector and $733 million USD spent on share buybacks and dividends over the past three years.

For perspective, in 2013, the year before the acquisition of Barr-Nunn, Knight Transportation’s truckload segment generated $822 million USD in revenue and $106 million USD in GAAP operating income (12.9 per cent operating margin). By 2022, through internal growth and several acquisitions, Knight-Swift’s consolidated truckload segment generated $4.5 billion USD in revenue and $747 million USD in GAAP operating income (16.5 per cent operating margin).

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