Swift: Moyes Is Back in the Driver's Seat
Some CEOs won't quit. After Swift Transportation's (SWFT) founder Jerry Moyes settled insider trading charges with the Securities and Exchange Commission in September, 2005, he stepped down from his role as the trucking company's CEO. About a year later, Moyes came back with an offer to buy out the company for $29 per share. When rejected, he tried again. Now Moyes finally won an agreement to take over Swift for $31.55 per share, or around $2.74 billion plus the assumption of $332 million debt, the Phoenix company said late Friday Jan. 19.
After the news, investors bid up Swift's stock more than 9% to $30.24 per share in early Nasdaq trading Jan. 22. Moyes' offer represents a 31% premium over Swift's closing price on Nov. 3, 2006, the last trading day before his first proposal. The deal is expected to close during the second half of 2007, pending customary approvals.
Swift's board chairman Jock Patton said he thinks Moyes' newest offer "represents a fair value for the company and is in the best interest of all shareholders," according to a Jan. 19 press release.
Standard & Poor's equity analyst Kevin Kirkeby hiked his 12-month target price on Swift's stock by $2 to $32 per share on Jan. 22 in order to take Moyes' bid price into account. (S&P, like BusinessWeek.com, is owned by The McGraw-Hill Companies.)
Morningstar analyst Peter Smith had thought Nov. 27 that Swift is fairly valued at $31 per share. Back then, Smith had predicted that the board would force Moyes to bid higher. (Moyes had said in his initial offering that he would increase the bid if the company gave him reasons for doing so.) "We think a deal will get done, but expect the final offer to come in somewhere in the mid-$30s--above our fair value estimate--driven more by Moyes' pride than by an accurate reflection of the firm's future cash-flow generation," Smith had written after the initial offer.
Moyes had started the company in 1966. Over the decades he and his family built it up - in part by acquiring numerous motor carriers - into a powerhouse that operates more than 17,900 trucks and generates more than $3 billion in annual revenue.
Then the SEC charged Moyes with buying Swift stock two trading days before May 24, 2004, when the company announced better than expected second quarter earnings and authorized a $40 million stock repurchase plan. As Swift's stock price rose 20% after the announcement, Moyes pocketed more than $622,000 from his somewhat too conveniently timed investment days earlier. Moyes settled the case in September, 2005, with a $1.25 million payment.
When Moyes left the company soon afterward, Swift's COO Robert Cunningham took over as CEO. But Moyes nonetheless remained Swift's largest shareholder. Now if Moyes' current offer goes through, he'll have more say at the company.
"I am extremely pleased to have reached this agreement with Swift and look forward to building on the unique Swift legacy that has positioned the company for continued growth and success," Moyes crowed in the press release announcing the deal he hammered out.