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Phoenix-based Knight-Swift Transportation Holdings (KS), the largest U.S. full-load trucking company, has bought regional carrier AAA Cooper Transportation (AAA) for $1.3 billion in cash and $10 million in Knight-Swift shares, the Wall Street Journal reported.
Knight-Swift also has assumed $40 million of AAA Cooper debt.
AAA Cooper, which travels the U.S. Southeast and Midwest, will continue operating under its own name.
The deal brings more than AAA Cooper’s 3,000 trucks and 7,000 trailers to Knight-Swift.
AAA Cooper is the 17th largest “less-than-full-truckload” (LTL) carrier in the U.S. The LTL industry is surging as suppliers make smaller, more frequent shipments to warehouses of Amazon and other online retailers.
LTL shippers earn better margins, charge higher prices, and see less volatility in their markets than full-load carriers, according to the WSJ.
AAA Cooper will bring Knight-Swift an additional $780 million in revenue this year, according to SJ Consulting Group, which helped Knight-Swift engineer the purchase.
The LTL industry “enjoys consistency,” Knight-Swift CEO David Jackson told the WSJ. “Those businesses just continue to be profitable.”
With the purchase of AAA Cooper, Knight-Swift will now gather about 14 percent of its revenue from the LTL market, he said.
The deal “positions us as a meaningful player in the LTL space,” Jackson added, “where we intend to grow both organically and through future acquisitions.”
TREND FORECAST: Again, one of the Bigs is using its established market power to grab a share of another market developed by others.
As our long-reported trend of Bigs getting bigger gains wider attention, the call for tougher antitrust enforcement will grow beyond its current focus on the tech and retail industries to encompass other economic sectors.
There will be calls to reconfigure antitrust laws so they provide legal mechanisms to rein in private equity firms from amassing greater and greater economic power and control across economic sectors.