by Lance Turner
Posted 9/30/2013 07:18 am
Updated 11 months ago
Knight Transportation of Phoenix said Monday that it has increased its ownership in outstanding shares of USA Truck Inc. of Van Buren to 11.3 percent.
In a Monday filing with the U.S. Securities and Exchange Commission, Knight said it had acquired an increased ownership position of nearly 1.2 million shares of USA Truck common stock (Nasdaq: USAK), or about 11.3 percent of USA Truck's outstanding shares. When Knight publicly announced its takeover offer Thursday, it said it owned an 8 percent stake in outstanding shares.
The company, which is offering to buy USA Truck in a deal worth $242 million, also said it was "disappointed" in USA Truck's rejection of its offer. On Thursday, USA Truck said Knight's offer "substantially undervalues" the company.
In a statement released Monday, Knight also said that it talked with "several" of USA Truck's largest shareholders who support Knight's takeover proposal and encouraged Knight to continue to pursue a deal. Knight did not name those shareholders.
According to Knight's statement:
"We are disappointed that USA Truck has once again rejected Knight’s all-cash, premium proposal. Since making our proposal public, we have had discussions with several of USA Truck’s largest shareholders that have indicated their support for our proposal and have encouraged us to continue to take the necessary steps to acquire USA Truck. We continue to believe that a combination of Knight and USA Truck is better positioned to deliver value for and is in the best interest of all of Knight and USA Truck’s stakeholders, and we are prepared to take the necessary steps to make this combination a reality."
On Thursday, Knight (NYSE: KNX) publicly announced that on Aug. 28, it offered to buy USA Truck for $9 per share, a 39 percent premium over USA Truck's Wednesday closing share price, but that USA Truck executives rejected the deal. The deal's valuation includes $95 million in equity value of USA Truck and $147 million in company debt.
Knight has said a deal to buy USA Truck would allow Knight to gain market share and financially strengthen its operations. It said it would also said it could "meaningfully increase the financial performance of USA Truck's operations," and that it could reserve the "erosion of value" in USA Truck stock as USA Truck continues to try to turn its business around.
Late Thursday, USA Truck released its own statement saying that its board of directors had reviewed Knight's latest takoever offer and "unanimously concluded that the proposal substantially undervalues USA Truck and is not in the best interests of USA Truck and its shareholders."
USA Truck has been retooling its business since last year, when it began making management changes and re-evaluating its business after reporting its biggest quarterly loss ever. New USA Truck CEO John Simone, who joined the company in February, has been evaluating the company's strategy as a short-haul carrier and has said he sees the foundation in place for a strong company.
Also last year, the company adopted a shareholders' rights plan designed to protect USA Truck and its shareholders from an unwanted takeover. At the time, USA Truck said it wasn't aware of "any pending unsolicited takeover offer for the Company."
In 2011, USA Truck rebuffed a takeover offer from Celadon Group of Indianapolis.