Knight Transportation Inc. has dropped its proposed $242 million acquisition bid for rival truckload carrier USA Truck Inc., at least for the next eight months.
Under an agreement announced late yesterday (Feb. 4), Knight will not pursue a takeover bid for USA Truck through at least September. Knight also will not buy up additional assets belonging to its rival or seek representation on USA Truck's board, also through September. In return, USA Truck has agreed to withdraw a lawsuit it had filed against Knight.
Under the agreement, Knight can maintain its 8-percent stake in USA Truck and may weigh its future options with regard to the investment, the two companies said in an announcement.
In September 2013, Phoenix-based Knight launched an unsolicited bid to buy Van Buren, Ark.-based USA Truck for $95 million in cash and $147 million in assumed debt. USA Truck's board rejected the offer as being undervalued. Knight hinted at the time that it would pursue a hostile bid, but such a bid never materialized.
The tussle between the rivals had become contentious, with USA Truck alleging that Knight presented its proposal to investors in a "misleading fashion."
A deal would have represented the largest truckload fleet acquisition in the United States in more than six years. Knight operates 4,100 rigs, while USA Truck has 2,100. The proposed buyout was seen in the market as a key step toward consolidating the huge but deeply fragmented truckload sector.
Knight and USA Truck operate complementary service lines with similar lengths of haul and fleets that are roughly the same age, Knight has said.
Knight had said an acquisition would shore up USA Truck's money-losing operations and provide USA Truck shareholders with better value than if the company continued to operate as a standalone entity. USA Truck, meanwhile, contended that Knight's proposal basically ignored the progress USA Truck had made in executing its turnaround plan.
In a statement, Kevin Knight, Knight's chairman and CEO, said the agreement preserves "our flexibility with respect to our investment." USA Truck said the agreement eliminates management distractions caused by the takeover bid and subsequent litigation.