USA Truck CEO: Merger With German Company 'Match Made in Heaven'

USA Truck CEO: Merger With German Company 'Match Made in Heaven'
A file photo of James Reed, CEO of USA Truck Inc. of Van Buren. The trucking company has been acquired by DB Schenker, a German logistics company. (Corey S. Krasko)

James Reed, the CEO of USA Truck Inc. in Van Buren, said the transportation company’s acquisition by German global logistics giant DB Schenker was “validation” of the USA Truck’s business strategy the last few years.

DB Schenker of Essen, Germany, announced it would acquire USA Truck for $31.72 per outstanding share — approximately $290 million — and the assumption of the company’s debt. Both companies said the total value of the transaction would be approximately $435 million.

The USA Truck board of directors unanimously approved the acquisition by DB Schenker. USA Truck stock price closed Thursday at $14.58 but jumped to more than $30 after the acquisition was announced Friday.

“We feel like this is a validation of the plan we set forward and the strategy we laid out,” Reed said. “We did everything we said we would and the market didn’t ever quite respond like we anticipated it would, but DB Schenker saw the real value that was locked inside this company. It is just a match made in heaven.”

Reed, CEO since January 2017, has led a turnaround that saw USA Truck emerge from the dreary financial years a decade ago to solid profitability. USA Truck reported revenue of $710.4 million and income of $24.8 million for fiscal 2021, and it has reported seven consecutive profitable quarters.

DB Schenker is a subsidiary of Deutsche Bahn of Essen, and USA Truck will operate as a private subsidiary of DB Schenker. USA Truck will be delisted from NASDAQ, and Reed said he doesn’t expect any management or staff changes at the company.

“It is business as usual,” Reed said. “We feel really well prepared and really well staffed for the future.”

DB Schenker is the world’s fourth-largest but has no significant foothold in the United States. In January 2021, executives told Freightwaves it would begin expansion projects through acquisitions in 2022 in order to enter the trucking markets in the states and in cross-border markets with Canada and Mexico.

USA Truck has 2,100 employees and more than 1,800 tractors.

“USA Truck is the perfect match for DB Schenker’s strategic ambition to expand our network in North America and foster our position as a leading global logistics provider,” DB Schenker CEO Jochen Thewes said. “Together we will enhance our shared value proposition and invest in exciting growth opportunities and sustainable logistics solutions for new and existing clients.”

Reed said the two companies had a “well-vetted process” before the acquisition was announced and said any additional details would be in a USA Truck proxy statement in the next 20 to 45 days.

“They came out swinging announcing their intentions to the US market,” Reed said. “For whatever reason it didn’t really land as intended. They have global aspirations, and they want that same kind of presence in the US. They were looking for a platform upon which to build. What an honor for them to see us in that light.

“They want to be the No. 1 or No. 2 transportation provider in the US. This is a start to them fulfilling their aspirations.”

USA Truck was formed in 1983 as a subsidiary of what is now ArcBest Corp. of Fort Smith. Former ArcBest executive Bob Powell bought USA Truck in 1989 and the company went public in 1992.

The company fell on hard times between 2009 and 2013 when it posted five consecutive losing years. It hired John Simone as CEO in February 2013 to stage a turnaround in the midst of a hostile takeover bid by Knight Transportation Inc. of Phoenix.

Simone didn’t live to see the turnover as he died of lung cancer in 2016, and USA Truck went through three CEOs in his wake before promoting Reed to the top spot in January 2017.

“This transaction recognizes the culture of excellence James, his team and all of our dedicated employees have created and commit to every day at USA Truck,” USA Truck Chairman Alexander Greene said. “It rewards our stockholders for their unwavering support during our turnaround and through the pandemic and offers further opportunity for our customers to draw upon USA Truck’s strengths utilizing the resources and reach of one of the world’s leading logistics services organizations.”

Reed said when he met with DB Schenker executives during the lead-up to the acquisition, they talked about culture rather than operations and financial matters. He said DB Schenker was “super people focused.”

“At the end of the day our job is to ensure the health of the business and maximize shareholders value,” Reed said. “We have always felt we had created a franchise that was underappreciated in the capital markets so when this opportunity came forward we thought it prudent to explore it. We couldn’t be happier.”

The price per share of the acquisition was incorrectly reported in a previous version of this story.

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