Either Knight Transportation is hard of hearing or just doesn’t take no for an answer, because the truck company is still making advancements to buy USA Truck Incorporated, even after USA Truck blatantly refused their offer. USA Truck, headquartered out of Van Buren Arkansas, serves the United States and parts of Canada and Mexico. The company has been struggling financially since 2008 with efficiency and driver turnover issues, but has since implemented a heap of new changes to try and turn things around.
The company has seen many new board of directors members and leaders at the helm since their profits began to sink. Besides staffing changes, the end of the 2012 saw the creation of a shareholder’s rights plan. The plan is in place to protect the shareholders of USA Truck should a hostile takeover become a reality. Under this plan, no entity or individual is allowed to own more than 15% of USA Truck’s stock until at least 2014, when the board decides if they want to keep the plan in place. Also, if anyone purchases 15% of USA’s stock, there is a 10 day long redemption period so USA Truck can have time to discuss future acquisition plans with this share buyer. The plan also gives time for USA Truck’s changes to bear fruit. The company predicted they would start seeing payoffs in their operational and leadership changes beginning in 2013 and didn’t want any takeovers to occur while they waited.
And there really have been some modest improvements for USA Truck in the past few months. In the first quarter of 2013, USA Truck lost $2.5 million, which is down from the $4.9 million lost in their first quarter the year before. The company also had a revenue of $105 million for their first quarter, up from $98 million the same time last year. Their gradual improvement may not be enough to keep Knight of their backs though.
Knight, determined for a takeover
Knight Transportation, out of Phoenix Arizona, first offered to buy USA Truck on August 28th of this year for $9 a share. If this plan had gone through, Knight would have spent $95 million on the shares and assumed $147 million in USA Truck’s debt. USA Truck responded in a letter on September 6th rejecting the deal as they believed it was less than what the company was worth. According to a statement released by USA Truck, they offered to meet with Knight to further discuss the deal but Knight refused. A few weeks later, Knight went public with their proposed deal and reported that a few of USA Truck’s shareholders supported the buy out. Knight has not let USA Trucks outright refusal of their offer stop them from trying to obtain the company, as Knight recently increased their number of shares in USA Truck from 8% to 11.3%. USA Truck probably hoped Knight would go the way of Celadon when they made moves on the company in 2011. Celadon owned 6% of USA shares and after their expression to form some kind of “association” was refused, they sold their shares and bought another company.
Could the future of USA Trucks come to an end, or will their new business strategy pay off? If there is a takeover, will it be a hostile one, or can USA Truck get on board? Not much is certain, but it doesn’t look like either company plans to quit without a fight.
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