Knight Transportation Proposes To Buy USA Truck For $9/shr In Cash

(RTTNews) - Knight Transportation, Inc.(KNX), Thursday said it has proposed to acquire all of the outstanding shares of USA Truck, Inc. (USAK) for $9 per share in cash. Including the approximate $147 million of USA Truck's outstanding net indebtedness, the deal is valued at about $242 million. It is expected that the proposed transaction could close as early as the fourth quarter of 2013. The deal is expected to be accretive to Knight's expected earnings per share in 2014 and beyond. The proposal represents a significant premium of 39 percent to USA Truck's closing price on September 25.

Knight's consolidated operating ratio for the six months ended June 30, was 85.3 percent, compared with USA Truck's consolidated operating ratio of 101.7 percent during the same period, and Knight expects to realize considerable operational improvements at USA Truck.

Knight believes that the deal has strategic and financial benefits for the both the companies. Knight said the deal would eliminate the significant execution risk of USA Truck's turnaround plan and reverse the erosion of value stemming from eight consecutive quarters of USA Truck net losses aggregating about $30 million or $3 per share. The proposal would also help Knight finance USA Truck's capital needs on a lower cost basis, reducing the risk to meeting the business' ongoing capital obligation.