Knight Transportation Inc. and Swift Transportation Co. have announced they are merging in an all-stock deal with a combined enterprise value of $6 billion, the combined entity will be called Knight-Swift Transportation Holdings Inc.
The transaction, first reported by the Wall Street Journal, will involve share swapping, with each share of Swift will converted to a 0.72 share of the new company which will be executed through a reverse stock split.
Shares of Knight Transportation will be swapped one-for-one.
Following the formation of the new company, existing shareholders of Swift will own 54% and rest 46% will go to Knight Transportation.
The merger deal values Swift shares at $22.07, which represents around 10% premium on its Friday’s closing price of $20.02 per share.
Swift is the fifth-largest trucking company in the U.S. in terms of revenue and Knight is 22nd, according to industry researchers SJ Consulting Group - behind competitors including United Parcel Service Inc. and FedEx Corp.
Swift and Knight, both based in Phoenix, are among the top carriers in the highly fragmented market for truckload services, in which customers including retailers and manufacturers buy space on entire trucks for long transport runs, typically more than 500 miles.
The combination will create a $5 billion behemoth, which will make the transaction the largest deal in the history of the U.S. trucking sector, beating the XPO Logistics’ purchase of Con-way for $3 billion in the year 2015.
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