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Knight-Swift enters LTL arena with $1.35B acquisition of AAA Cooper

Knight-Swift enters LTL arena with $1.35B acquisition of AAA Cooper

Knight-Swift acquires AAA Cooper in $1.35 billion dealKnight-Swift acquires AAA Cooper in $1.35 billion deal

The nation’s largest truckload carrier, Knight-Swift Transportation (NYSE: KNX), announced Tuesday it has acquired less-than-truckload carrier AAA Cooper Transportation in a transaction with an enterprise value of $1.35 billion.

Dothan, Alabama-based AAA Cooper is expected to generate full-year 2021 revenue of $780 million, $140 million in earnings before interest, taxes, depreciation and amortization and $80 million in operating income. The press release said the transaction will be accretive to Knight-Swift’s adjusted third-quarter earnings by an undisclosed amount as the carrier operates at a high-80% to low-90% operating ratio.

AAA Cooper operates a very large regional LTL network in the Southeast and Midwest with 70 facilities, more than 3,400 doors and 4,800 employees. The carrier has a fleet of 3,000 tractors and 7,000 trailers and provides nationwide service through affiliates.

“We have long had interest in the LTL space and admired the success of AAA Cooper. We feel honored to be stewards of the AAA Cooper brand and, similar to previous acquisitions, AAA Cooper will continue to operate independently while benefiting from the many synergies we expect through Knight-Swift,” said Dave Jackson, Knight-Swift CEO.

Jackson said the criteria for selecting the LTL company as a partner included its significant market share, profitability makeup and a management team that could operate independently.

“We were excited to have identified AAA Cooper as a partner that meets all three requirements, and I couldn’t be happier to finally find the right time for both of us to create a partnership. This transaction firmly positions us as a meaningful player in the LTL space, where we intend to grow both organically and through future acquisitions,” Jackson added.

The transaction was funded with $1.3 billion in cash, which came from a new $1.2 billion term loan as well as existing liquidity, $10 million in Knight-Swift stock and the assumption of $40 million in net debt.

Acquisition price $1.35B enterprise value
Combined value ~$9B enterprise value
Target revenue run rate $780M
Acquirer revenue run rate $4.7B
Expected cost synergies TBA
Earnings expectations/accretion $0.13 in H2/21, $0.29 in 2022
Recent acquisitions by acquirer UTXL, Eleos, Abilene Motor Express, Swift Transportation
Financing debt, cash, stock
Table: Company reports

No specifics on potential cost and revenue synergies were provided but Knight-Swift will host a call at 10:30 a.m. EDT Tuesday to discuss the transaction further.

AAA Cooper will continue to operate as an independent entity with current CEO Reid Dove remaining at the helm. Dove has also been appointed to Knight-Swift’s board.

“Joining the Knight-Swift team is an exciting combination for the AAA Cooper team members and customers,” stated Dove. “It will allow us to pursue new opportunities and accelerate our growth. We will continue to operate as an independent company, headquartered in Dothan, Alabama, and will do so with the support and partnership of the strongest provider in the full truckload space.”

Scudder Law Firm was the legal adviser to Knight-Swift, with SJ Consulting Group providing advisory services.

Click for more FreightWaves articles by Todd Maiden.


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6 July 2021, 16:32