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

USA Truck's stock price through the middle of 2013.

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."

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."
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