Knight Transportation Inc. made a hostile bid to buy USA Truck Inc. 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.
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. in October 2011.