Two of the biggest trucking companies in the United States have recently entered the ring to contend with one another. In one corner, it's the Knight Transportation. In the other, Swift Transportation.
Knight Transportation is a trucking company founded by four cousins back in 1990. It is now one of the biggest trucking companies in the United States. Furthermore, the company's stock is publicly traded on the New York Stock Exchange with the symbol of KNX. The company is now largely based in Phoenix, Arizona.
On the other hand, Swift Transportation has a long history, tracing back its roots to the 1940s. Carl Moyes is regarded as the true founder of the company, and he was a truck driver himself. Back then, the company was named as Common Market. Official operations began around 1966. At the time, the company hauled steel from Los Angeles to Phoenix. When returning, the trucks delivered cotton from Arizona to Southern California. The name Swift was originally from the Swift Meat Packing family. Along the way, a fellow named Randy and Ronald Knight became two of the partners of the Swift Company. When Randy became a co-founder of the Knight Transportation while still holding stocks in the Swift Transportation company, it wasn’t long before they realized that something big would happen soon.
As the tension between two trucking giants grew, a surprising turn of events transpired. Swift Transportation and Knight Transportation recently announced they would merge together.
The new company will be named the Knight-Swift. Interestingly, the two companies decided to have a holding-company structure, but each company will still carry its own distinct brand. This is all according to a statement released last Monday.
As the two companies are publicly traded and each has its own ticker symbol, the merger posed a challenge to the company's stock. In the end, the two companies decided that Swift shares will be converted to .72 shares of the Knight-Swift company. Conversely, each share of the Knight company will be swapped for a single Knight-Swift share.
The merger is largely a strategic maneuver. With said link up, the newly formed company will be able to tackle its competitors. The merger is also said to be a response to the changing industry, specifically to cater indirectly to home deliveries which is the reason for the increased cost and volume in the industry.
By combining the total revenue of the two companies, it tops out at around $5.1 billion. Adjusted operating income for last year also puts it at around $416 million. The merger offers cost-saving synergies that will save the both company a total of $15 million during the second half of the year 2017. It is estimated that the savings will result to $150 million by 2019.
Dave Jackson, Knight Transportation's CEO, will now be acting as the CEO of the newly formed Knight-Swift company. The company now holds 23,000 vehicles and employs more than 28,000 people.