What Some Analysts Are Saying About Knight Transportation’s Play for USA Truck

As we’ve reported, USA Truck Inc. of Van Buren has rejected a $242 million takeover offer by Knight Transportation of Phoenix. According to Knight, USA Truck has told them that “the company is not for sale.”

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While Knight wouldn’t comment on the deal beyond what it said in its SEC filing and news release, and USA Truck is keeping mum, analysts are giving the deal a good going over. Here’s some of what they’re telling clients in research notes obtained by Arkansas Business:

Bank of America/Merrill Lynch: Ken Hoexter and Veronica Zhang:

  • USA Truck has 2,000 tractors, which would increase Knight’s 3,943-tractor fleet by about 50 percent.
  • This would be Knight’s fifth takeover deal and its largest by about 10 fold.
  • USA Truck’s most recent quarterly revenue figure, $139 million, would boost Knight’s $245 million quarterly revneue total by 57 percent.
  • The analysts view Knight’s move “positively” if it’s able to seal the deal with USA Truck. It said that each of its previous acquisitions has “proven accretive over the subsequent 2-3 years.”

KeyBanc Capital Markets: Todd Fowler and Ryan Cieslak:

  • They estimate the proposed purchase price is about nine times USA Truck’s trailing EBITDA, 0.5 times its trailing revenue and 0.9 times book value.
  • They note that Celadon had made a takeover attempt a couple of years ago, which USA Truck rebuffed. But they also note that USA Truck’s seen management and board turnover since then.
  • While saying they think large truckload deals can be difficult to integrate, they think a Knight purchase of USA Truck could be “significantly accretive in the near term and, on the whole, good for the broader trucking industry.

Wells Fargo: Anthony Gallo, Michael Busche and Casey Deak:

  • An operational turnaround of USA Truck would be Knight’s primary focus, they think.
  • Such a turnaround acquisition would be “a sound strategy” for Knight, who recent activities suggest “hands-on turnaround experience.”