Shares of trucking company Knight Transportation (KNX -2.82%) were rising today on news that the short-and-medium-haul carrier has made a bid to buy microcap rival trucker USA Truck for $9 a share.
But USA Truck has not been interested in a deal, Knight said Thursday. Knight said it may consider "modestly" raising its bid if it finds more value in USA Truck during a due diligence process. USA Truck declined to comment Thursday to The Associated Press.
The deal on offer, which values USA Truck at $95 million for its equity, or $242 million with debt included, is being portrayed by Knight as paying a 39% premium to yesterday's closing price of its rival's shares. Investors today have bid up USA Truck's shares to just under $9 at this writing, suggesting high confidence among investors that the deal will go through.
Knight already owns 8% of USA Truck's shares, and believes that its $9-a-share offer for the rest "would provide significant and immediate cash value that is significantly more attractive than USA Truck's stand-alone prospects." Prior to the offer being made, USA Truck had a market capitalization of only $67 million -- against $148 million in debt, and less than $1 million in cash on hand.
As for what's in it for Knight, the company said "a combination with USA Truck would create value by further enhancing our position as a leading provider of multiple truckload transportation services in North America," increasing its annual revenues by about $531 million, or 55%, in one fell swoop.
USA Truck is in the midst of a turnaround effort. It hasn't reported an annual profit since 2008.
-- Material from The Associated Press was used in this report.
