Two of trucking’s biggest carriers are planning to merge in what would be the largest acquisition in trucking industry history. Knight Transportation and Swift Transportation announced the $6 billion merger this week.
The two competing companies have a long, intertwined history. Before Knight was founded in 1990, Kevin, Gary, and Randy Knight all worked for Swift, helping founder Jerry Moyes build the company to the giant it is today.
“I cannot think of a better combination,” said Moyes in a press release announcing the merger. “The Knight and Moyes families grew up together, and the Knights helped me build Swift before starting their own company and making it an industry leader in growth and profitability.”
According to the merger announcement, the new company will be called Knight-Swift Transportation Holdings. The companies will maintain their separate brands and operations, but they will operate under common ownership. Under that “common ownership” though, some reports claim that it seems like the Knight camp may have come out on top.
The new Board of Directors for the holding company will consist of all current Knight directors, but only four Swift directors – two to be named by the current Swift board, and two to be named by Moyes himself.
Knight’s current CEO and CFO will stay in place in their current roles at the new company, but the merger announcement states that Swift’s current CEO and CFO “have chosen to pursue other opportunities.” Kevin Knight will take over as the President of the Swift operating entities.
Additionally, while current shares of both companies will be converted into shares of the new company, Swift shares will convert at a rate of 0.72 shares to 1 while Knight shares will convert at a 1 to 1 ratio.
Both Swift and Knight’s leadership sound excited about the new direction the companies will be taking however, with even Swift’s outgoing CEO managing to voice support; “I am 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.”
Moyes however seemed to be the biggest cheerleader, saying that he’s “very confident” that the merger is the right approach and called for “everyone at Swift to join me in supporting the Knight-Swift leadership team.”
Jerry Moyes will stay on as a “non-employee senior advisor” to the Knights and will continue to receive his $200k per month consulting fee that Swift started paying him when he stepped down as CEO at the end of 2016. Despite not being an executive at the new company, as the owner of a significant number of shares, Moyes and his family stand to do very well if the new venture succeeds.
“The Knights have known Jerry for 50 years, and we worked with him at Swift for over a decade,” Kevin Knight said. “He trusts us and is fully committed to the ongoing board and leadership team.”
The merger has been approved by both boards, but will now need to be approved by the shareholders of both companies in order to move forward.
According to a statement put out by Knight Transportation, the merger should be beneficial for shareholders of both companies. If the merger is approved, the combined companies will be able to take advantage of greater economies of scale. Knight states that this would generate savings of $15 million in the second half of 2017 alone. Savings in 2018 would go up to $100 million, and then another $150 million in 2019 according to Knight’s estimates.
The new company will have an estimated 23,000 tractors, 77,000 trailers, and 28,000 employees. The merger announcement claims that Knight-Swift will create “North America’s premier 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.”
If this merger is approved, less than 30 years after leaving Swift to start their own company, the Knight family will return and crown themselves kings.