The all-stock deal reunited Knight executives with Swift founder Jerry Moyes, for whom they used to work.
Phoenix trucking giants Knight and Swift announced Monday they will merge to form a shipping venture with $5 billion in annual revenue.
The new company will be called Knight-Swift Transportation Holdings Inc. and remain based in Phoenix. It will have about 23,000 trucks, 77,000 trailers, and 28,000 employees operating under distinct brands.
The companies report the merger will create the “largest full truckload company,” although trucking company JB Hunt Transport Services Inc. of Arkansas has a market value of more than $10 billion, compared with about $6 billion for the combined Knight-Swift.
The all-stock deal will give people who owned shares in Swift Transportation Co. 0.72 shares of the new company for each Swift share they owned, and Knight stockholders will get a 1-1 share in the new company.
Reconnecting 2 decades later
The merger reconnects the Knight executives who left Swift to start their own trucking company in 1990, soon rivaling their former employer in size.
Kevin Knight, founder and chairman of Knight, along with his brother Keith and cousins Randy and Gary, all worked for Jerry Moyes, whose family established Swift Transportation as a trucking giant in Phoenix.
“We were very, very fortunate to work for Jerry,” Knight said of Moyes during a 2014 speech to local business leaders.
Moyes has been involved in other ventures, such as the Arizona Coyotes hockey team.
“No matter what you may have read in the newspaper, he is a terrific guy,” Knight said in the speech.
Moyes launched Swift with a single truck in 1966 at the request of a family friend who saw potential in Arizona’s growth. Moyes’ parents were running their own company in Utah.
Initially, Moyes’ Phoenix company was called Common Market Distribution Corp. His father acquired a meat company named Swift, and when Moyes’ company later merged with his father’s company, they used the Swift name.
Stockholders have yet to vote on deal
Moyes, who retired last year after celebrating Swift’s 50th year in business, remains the controlling stockholder. He said in a prepared statement Monday that he welcomes the combination.
“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,” Moyes said. “I am confident that we have the right approach to maximizing the contribution of both teams, and I look forward to helping the Knight-Swift leadership team in any way I can to continue the legacy of both great companies.”
The boards already have approved the deal, but stockholders still need to vote on it. The Moyes family owns 56 percent of Swift voting power, and the Knights hold about 10 percent of their company. The families have agreed to vote for the transaction.
Kevin Knight will serve as executive chairman of the new company and president of the Swift operating entities. Moyes will be an adviser to the Knights.
Knight CEO Dave Jackson will be CEO of the new company. The CEO and chief financial officers at Swift will leave the company after the merger, according to the announcement.
Combining the operations is expected to save $15 million in the second half of this year alone, according to the companies.
The savings are expected from running their trucks more efficiently, improving yield, purchasing benefits, a larger geographic footprint and lower borrowing costs. Increased efficiency is projected to save the combined company $100 million next year and $150 million in 2019, according to the announcement.
The deal is expected to close in the third quarter, and shares of the new company will trade on the New York Stock Exchange under the ticker “KNX.”
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