Bloomberg News

Knight Bids $242 Million for USA Truck After Initial Spurn (2)

September 26, 2013

Knight Transportation Inc. (KNX:US) made a hostile bid to buy USA Truck Inc. (USAK:US) in a $242 million transaction and said a combination would allay risk in the short-haul carrier’s turnaround plan and bring value to shareholders.

USA Truck soared 36 percent, its biggest advance since its initial public offering in 1992. A representative for Van Buren, Arkansas-based USA Truck declined to comment.

Knight Chief Executive Officer Kevin Knight said he’d be prepared to “modestly increase” a $9 per share proposed offer price if additional value is identified in due diligence, according to an Aug. 28 letter. Knight, which had sought a response by Sept. 6., said an acquisition would bolster USA Truck’s turnaround plan and help reverse eight consecutive quarters of net losses (USAK:US).

“Our company has a demonstrated history of operational excellence, and we believe that we can meaningfully increase the financial performance of USA Truck’s operations,” CEO Knight said in a statement today.

USA Truck closed at $8.80 in New York, after rising as high as $9.33 in intraday trading. The shares have more than doubled this year, compared with a 19 percent rise in the Standard & Poor’s 500 Index. Knight rose 3.8 percent to close at $16.60.

‘Good Fit’

The bid is 39 percent more than USA Truck’s closing price yesterday, Phoenix-based Knight said in the statement. The total deal value includes USA Truck’s $147 million in debt. Knight also today disclosed an 8 percent stake in USA Truck.

USA Truck would be a “strategically good fit” with Knight’s operations because the trucking companies have good overlap with their service networks, said Todd Fowler, an analyst at Cleveland-based KeyBanc Capital Markets Inc.

“Historically, integrating large truckload transactions is difficult,” Fowler said. “Knight is a very well-run company, so we have confidence in the management team and we think they’ve done their homework.”

Fowler recommends buying Knight shares.

USA Truck turned down a proposal for merger talks from Celadon Group Inc. (CGI:US) in October 2011.

To contact the reporter on this story: Caroline Chen in New York at cchen509@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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Companies Mentioned

  • KNX
    (Knight Transportation Inc)
    • $24.5 USD
    • 0.24
    • 0.98%
  • USAK
    (USA Truck Inc)
    • $17.67 USD
    • 0.01
    • 0.06%
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