Swift Transportation (SWFT) and Knight (KNX) announce all stock merger

Swift Transportation and Knight (KNX) announce all stock merger; Swift share will convert into 0.72 shares of Knight-Swift by means of a reverse stock split, implying $22.07 for Swift; both cos guides Q1 and Q2 EPS below consensus (SWFT) :

Knight Transportation (KNX) and Swift Transportation (SWFT) announced that their boards of directors have unanimously approved a merger of Knight and Swift in an all-stock transaction that will create the industry's largest full truckload company. The combined company will be named Knight-Swift Transportation and will trade under the ticker "KNX."

• This transaction combines under common ownership two long-standing industry leaders creating North America's premier truckload transportation company with $5 billion in annual revenue and a "Top 5" truckload presence in dry van, refrigerated, dedicated, cross-border Mexico and Canada, and a significant presence in brokerage and intermodal. The company will remain headquartered in Phoenix, Arizona operating with ~23,000 tractors, 77,000 trailers, and 28,000 employees.

Each Swift share will convert into 0.72 shares of Knight-Swift by means of a reverse stock split. Each share of Knight will be exchanged for one Knight-Swift share. Based on the $30.65 closing price of Knight shares on April 7, 2017, the last trading day prior to the announcement, the implied value per share of Swift is $22.07. Upon closing of the transaction, Swift stockholders will own ~54 percent and Knight stockholders will own ~46 percent of the combined company. Based on Knight's closing share price on April 7, 2017, the number of combined company shares expected to be outstanding after closing and the combined net debt of Swift and Knight as of December 31, 2016, the combined company would have an implied enterprise value of ~$6 billion. Knight is expected to be the accounting acquirer, and the transaction is expected to be accretive to adjusted earnings per share with expected pre-tax synergies of ~$15 million in the second half of 2017, $100 million in 2018, and $150 million in 2019.