Yesterday morning, Knight Transportation (NYSE: KNX ) announced plans to buy struggling trucking rival USA Truck for $9 a share -- but it turns out not every company is looking to be saved by a Knight.
Later yesterday, USA Truck responded publicly to Knight's offer, issuing a press release in which it termed the $9 bid "unsolicited," "misleading," and "not in the best interests of USA Truck and its shareholders," and said it "substantially undervalues" the company.
As USA Truck points out, Knight actually offered USA Truck $9 a share nearly a month ago, in a letter to USA's board of directors dated Aug. 28. USA said it responded to that bid privately, calling it inadequate, but offered to enter into talks about the possibility of a better bid. USA Truck says Knight declined to meet with its negotiators, instead going silent -- until suddenly making its announcement of a bid public yesterday.
Knight disclosed in yesterday's announcement that it had sent USA Truck a proposal letter on Aug. 28, including the full text of this letter, but did not mention in its press release what had happened subsequently. An SEC filing says that after USA Truck indicated it was not for sale after that Aug. 28 letter, Knight Transportation "communicated to USA Truck that Knight Transportation saw no merit in engaging in discussions directly with USA Truck management. ... Knight Transportation believes that USA Truck stockholders will find its $9.00 per share proposal to be very attractive. Accordingly, Knight Transportation decided to publicly disclose its proposal by issuing the press release."
Knight said in its press release yesterday that it is prepared to "modestly increase" the proposed purchase price if additional value is identified. As it stands, the deal is valued around $242 million, including USA Truck’s approximately $147 million of outstanding net indebtedness.