Truckload carrier Knight-Swift Transportation Holdings Inc. is continuing to add capacity by acquiring smaller carriers, announcing today that it has paid $150 million to buy Midwest Motor Express Inc. and Midnite Express Inc. in a move to expand its nationwide less than truckload (LTL) footprint.
Phoenix, Arizona-based Knight-Swift bought the two units, which are known collectively as MME, from an ownership group of three investment firms; Red Arts Capital, Prudential Capital Partners, and Brightwood Capital Advisors.
According to the fleet, MME’s footprint in the upper midwestern and great northwestern regions of the U.S. will complement both Knight-Swift’s existing LTL presence in the southeastern and midwestern areas and its AAA Cooper Transportation (ACT) brand. Knight-Swift acquired ACT just six months ago, paying $1.35 billion to enter the LTL space and diversify its revenue streams.
As the new owner of MME, Knight-Swift said it has already identified “potential areas of revenue and cost synergies that are expected to lead to growth and margin expansion” but that it plans to preserve “MME’s brand, locations, people, and culture.”
The MME package includes LTL, full truckload, and specialized and international logistics transportation services conducted through a network of over 30 service centers with a door count of approximately 800, served by a fleet of some 460 tractors and 930 trailers. Knight-Swift is much larger, operating about 19,000 tractors, 58,000 trailers, and employing 24,000 people for its logistics services throughout the U.S., Mexico, and Canada.
More specifically, Knight-Swift CEO Dave Jackson said that “MME is our next step toward a nationwide LTL network. While preserving and supporting MME’s identity and culture, we expect to bring many synergies from Knight-Swift. MME and ACT have minimal regional overlap, and we expect they will be a benefit to one another."
Financial analysts agreed with Jackson, saying that despite the large size difference between the two firms, the move is a “smaller but important step in building out [its] national LTL footprint,” according to a note to investors from Baird Senior Research Analyst Garrett Holland.
The MME deal marks Knight-Swift’s latest strategic step closer to building a national LTL network, evolving its business mix, and helping to reduce cyclical changes in revenue, Holland said. Stacked alongside the ACT buyout, the MME deal will push Knight-Swift to become the 13th largest LTL carrier in the U.S.
Despite those impacts, current MME clients will likely see little disruption. Holland noted that the current MME leadership team will continue to run operations, and there is little overlap between its operating region and ACT’s southeastern/midwestern LTL footprint.