Knight Transportation and Swift Transportation 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 Holdings.

This transaction creates a truckload transportation company with $5 billion in annual revenue and a truckload presence in dry van, refrigerated, dedicated, cross-border Mexico and Canada and a significant presence in brokerage and intermodal. The holding company structure will enable the Knight and Swift businesses to operate under common ownership and share best practices, while maintaining distinct brands and operations. The company will remain headquartered in Phoenix, operating with approximately 23,000 tractors, 77,000 trailers and 28,000 employees.

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 approximately $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 approximately $15 million in the second half of 2017, $100 million in 2018 and $150 million in 2019.

“In Knight’s 26-year history, we have built a truckload company with industry leading margins and investment returns,” said Kevin Knight, executive chairman. “When the two companies began discussions, we had four goals in mind: create a company with the best strategic position in our industry, identify significant realizable synergies that would create value for both sets of stockholders; create a business that over the long-term will operate at Knight’s historical margins and financial returns and agree on a leadership and corporate governance framework that will benefit all stakeholders. I am confident we have achieved those goals.”

“This is a terrific opportunity for our stockholders, who stand to benefit from the significant upside potential of this transaction. Indeed, by coming together under common ownership, the companies will be able to capitalize on economies of scale to achieve substantial synergies,” said Richard Dozer, Swift chairman. “This is an exciting chapter in the Swift story and everyone who is a part of it should be both proud of what we bring to the table and excited about what lies ahead. I am confident in this new team, in the new structure and in the future of Swift in the industry.”

On a combined basis, Knight and Swift generated approximately $5.1 billion in total revenue, $416 million in adjusted operating income and $806 million in Adjusted EBITDA for 2016. The combined financial information excludes synergies, transaction and related expenses, and transaction accounting, including amortization of intangibles.

On a combined basis, as of December 31, 2016, net debt was approximately $1.1 billion, and Knight-Swift’s leverage ratio (net debt/Adjusted EBITDA) was approximately 1.3x. The Swift credit facilities are not required to be refinanced in connection with the closing but may be refinanced in the future on more attractive terms.

The board of directors of Knight-Swift will comprise all Knight directors and four current Swift directors. The Jerry Moyes family will initially be entitled to designate two directors reasonably acceptable to the Board, one of whom must be independent, with the initial designees being Glenn Brown and Jerry Moyes. The remaining two directors were chosen by the Swift board and will be Dozer and David Vander Ploeg. Kevin Knight will serve as executive chairman of the board and Gary Knight will serve as vice chairman.

The executive team of Knight-Swift will be led by Knight as executive chairman, Dave Jackson as CEO and Adam Miller as CFO. Following the close of the transaction, Knight will serve as president of the Swift operating entities. Moyes will serve as a non-employee senior advisor to Kevin and Gary Knight.

Richard Stocking, CEO of Swift, and Ginnie Henkels, CFO Officer of Swift, have chosen to pursue other opportunities following the closing of the transaction.

The transaction is subject to customary conditions, including the approval of the stockholders of Knight and Swift, as well as antitrust approvals. The Jerry Moyes family, which holds approximately 56% of the Swift voting power, and Kevin Knight and Gary Knight, who hold approximately 10 percent of the Knight voting power, have agreed to vote their shares in favor of the transaction.

The transaction is expected to close in Q3/17.