Breaking News

Morgan Stanley to Pay $275 Million to Settle Subprime SEC Charges
Tweet TWEET

Knight Bids $242 Million for USA Truck After Initial Spurn

Knight Transportation Inc. (KNX) made a hostile bid to buy USA Truck Inc. (USAK) 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.

“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) 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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.