Knight-Swift acquires AAA Cooper for $1.35 billion
The nation’s largest truckload carrier, Knight-Swift Transportation, announced recently it had acquired less-than-truckload (LTL) carrier AAA Cooper Transportation in a transaction with an enterprise value of $1.35 billion.
Dothan, Ala.-based AAA Cooper is expected to generate full-year 2021 revenue of $780 million, $140 million in earnings before interest, taxes, depreciation and amortization (EBITDA) and $80 million in operating income. The deal is expected to add 13 cents per share to Knight-Swift’s adjusted earnings in the second half of this year and 29 cents per share to earnings next year.
The transaction amount implies an acquisition multiple of less than 10 times EBITDA.
AAA Cooper has a large regional LTL network in the Southeast and Midwest with 70 facilities and 4,800 employees. The carrier has a fleet of 3,000 tractors and 7,000 trailers and provides nationwide service through affiliates. AAA Cooper has recently been operating at a high 80-percent to low 90-percent operating ratio.
“We have long had interest in the LTL space and admired the success of AAA Cooper. We feel honored to be stewards of the AAA Cooper brand and, similar to previous acquisitions, AAA Cooper will continue to operate independently while benefiting from the many synergies we expect through Knight-Swift,” said Dave Jackson, Knight-Swift’s chief executive.
Jackson said the criteria for selecting the LTL company as a partner included its significant market share, profitability makeup and a management team that could operate independently.
The transaction was funded with $1.3 billion in cash, which came from a new $1.2 billion term loan as well as existing liquidity, $10 million in Knight-Swift stock and the assumption of $40 million in net debt.
AAA Cooper will report results as a standalone division of Knight-Swift with current chief executive Reid Dove remaining at the helm. Dove has also been appointed to Knight-Swift’s board.