Logistics and transport have been rough markets lately. Between a badly beaten supply chain and an uncertain macroeconomic picture, transporting goods becomes that much more difficult. Now, Knight-Swift Transportation (NYSE:KNX) is poised to consolidate the field a little more by buying U.S. Xpress (NYSE:USX) in a major, nine-figure deal.
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Leaving aside transaction costs, Knight-Swift is shelling out $808 million to pick up U.S. Xpress. Both companies’ boards approved the deal. Investors absolutely approved on U.S. Xpress’ side, sending the stock up over 298% in Tuesday’s trading. Knight-Swift investors weren’t exactly unhappy either, sending the stock up nearly 7%. The $808 million Knight-Swift is shelling out, reports note, represents a four-fold premium over the Monday close, which was at $1.50.
If that sounds way too extravagant, consider the benefit for Knight-Swift. Reports note that its consolidated run rate would approach $10 billion thanks to a combined fleet strength of 25,000 tractors and 93,000 trailers. Perhaps most interesting is that the deal produced a halo effect that drove up several other trucking stocks. For instance, Yellow Corporation (NASDAQ:YELL) jumped over 6% on this news, while Radiant Logistics (NYSE:RLGT) added over 3.5%.
Knight-Swift Transportation, meanwhile, enjoys plenty of analyst support. KNX shares are considered a Moderate Buy by analysts, with Buy recommendations outstripping Hold or Sell recommendations by four to one. Further, Knight-Swift stock enjoys 17.58% upside potential thanks to its average price target of $66.60 per share.
