Swift agrees to be acquired by Moyes for $2.74 billion

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Swift Transportation Co. announced late Friday, Jan. 19, that it has entered into a definitive merger agreement with an entity formed by Jerry Moyes — the company’s largest shareholder, a current director and former chairman of the board and chief executive officer — pursuant to which Moyes and family members will acquire Swift in an all-cash transaction valued at about $2.74 billion. This includes the assumption of approximately $332 million of net debt.

Under the terms of the agreement, stockholders of Phoenix-based Swift will receive $31.55 in cash for each outstanding share of Swift common stock, which represents a premium of about 31 percent from the closing price of Swift stock on Nov. 3, the last trading day before Moyes made an initial proposal to acquire the company for $29 per share.

The transaction — subject to review by regulatory agencies under the Hart-Scott-Rodino Antitrust Improvements Act, approval by Swift stockholders and other customary closing conditions — is expected to be completed during the second quarter of 2007. Moyes has received commitments from Morgan Stanley for debt financing for the transaction.

“Swift, which I founded in 1966 as a small company with a strong entrepreneurial spirit, has evolved into the operator of the largest truckload fleet in the United States with a dedicated and energetic team of employees, over 17,900 trucks and nearly $3.2 billion in revenues,” Moyes said in a statement. “I am extremely pleased to have reached this agreement with Swift and look forward to building on the unique Swift legacy that has positioned the company for continued growth and success.”

Jock Patton, chairman of the company’s board of directors and chairman of the special committee, commented, “After careful consideration, and in close consultation with our financial and legal advisors, the special committee — which is composed of three of the board’s independent directors — and full board (other than Moyes) unanimously approved the transaction. We believe the all-cash $31.55-per-share price represents a fair value for the company and is in the best interest of all shareholders.”

Goldman, Sachs & Co. acted as financial adviser to the special committee, and Sullivan & Cromwell served as its legal advisers. Morgan Stanley acted as financial adviser to Moyes, and Skadden, Arps, Slate, Meagher & Flom and Scudder Law Firm acted as his legal advisers. Mayer, Browne, Rowe & Maw acted as legal advisers to Morgan Stanley.

Moyes originally sent a letter to Swift executives Nov. 6 notifying them of his intent to buy the company and take it private. With a total of 75.9 million shares outstanding, the total value of the offer was about $2.17 billion. In the letter, Moyes stated that the offer would remain on the table through Nov. 20. On Nov. 17, Moyes extended that deadline to Nov. 27 in a filing with the U.S. Securities and Exchange Commission.

The Teamsters union later came out against Moyes’ offer, saying Swift should make no disclosures to Moyes “until such time as he provides a credible, fully financed offer that reflects the true value of our company.” The Nov. 17 letter to Patton from Teamsters General-Secretary Treasurer C. Thomas Keegal also questioned whether Moyes’ continued presence on the Swift board of directors was “legal, appropriate, and in the best interests of Swift shareholders.”

Two Swift shareholders, Milton Pfeiffer and Audrey Molinari, also filed separate lawsuits against the Moyes deal in Maricopa County, Ariz., Superior Court. Molinari’s lawsuit called $29 per share “unconscionable, unfair and grossly inadequate,” while Pfeiffer’s lawsuit charged that Moyes “can influence the management and operations of the company in order to squeeze out the public shareholders” and obtain their shares “at an unfair price and unfair terms.”

On Nov. 27, Swift announced that a three-director committee had determined that Moyes’ original offer of $29 a share in cash was inadequate, but that it would talk with Moyes and other potential buyers to determine whether the price could be increased. The committee said it would act expeditiously, but had no timetable for its discussions with Moyes and other parties.

Moyes founded Swift Transportation in 1966 and ran it for decades, but stepped down as president in November 2004 and as CEO in December 2005 in the wake of a federal lawsuit over his stock transactions. While neither admitting nor denying any wrongdoing, Moyes agreed in fall 2005 to pay $1.26 million to settle charges of insider trading with the U.S. Securities and Exchange Commission.

Earlier this year, Moyes reached an agreement to buy Central Freight Lines, based in Waco, Texas, and take the company private. Moyes also is majority owner of the Phoenix Coyotes hockey team and the Arizona Sting lacrosse team.