Knight Acquires Barr-Nunn for $112 Million
This story appears in the Oct. 6 print edition of Transport Topics.
Knight Transportation said last week it bought dry van truckload carrier Barr-Nunn Transportation for about $112 million.
Barr-Nunn will keep its name, management team and personnel in place, Knight said in a statement Oct. 1.
Granger, Iowa-based Barr-Nunn has 550 trucks, of which about 440 are company-owned. The rest are owner-operator leases.
Knight, based in Phoenix, said it paid $112.4 million for the privately held carrier and real estate assets, which is subject to post-closing “true-up,” or purchase price adjustments. It also allows for up to an additional $3.5 million, based on financial performance.
“Our goal as the new owner is to afford Barr-Nunn access to our capital, purchasing power and knowledge base as they continue operating the business under the Barr-Nunn name and culture,” said Kevin Knight, chairman and CEO of Knight Transportation. “We believe strongly in the power of our model, and Barr-Nunn is the perfect size for a new business unit.”
Publicly traded Knight Transportation ranks No. 31 on the Transport Topics Top 100 list of largest U.S. and Canadian for-hire carriers.
Barr-Nunn generated about $119.8 million in revenue — $99.2 million excluding fuel surcharges — for the 12 months ended Aug. 31. It posted $26 million in earnings before interest, taxes, depreciation and amortization, and $14.9 million in operating income.
“Knight was our No. 1 choice for a buyer because their pursuit of excellence, their commitment to a career path for employees and their support of regional management teams strongly aligned with our goals,” Barr-Nunn CEO Jane Sturgeon said in a statement.
Knight declined to comment beyond its statement, and Barr-Nunn did not return phone calls seeking comment.
Analyst John Larkin of Stifel, Niclaus & Co. said in an investors note he was surprised the companies would be kept separate.
“One would think there would be synergies available if Knight were to combine the networks, integrate systems, and reduce administrative staff and additional overhead — exclusive of integration risk,” Larkin said.
He also said the deal will boost Knight’s earnings by 8 cents to 10 cents per share per year.
Another analyst told TT the deal was indicative of continuing consolidation in the truckload sector.
“This confirms that the market is heating up [and] that the money that’s been sitting on the sideline waiting for an acquisition is now willing to pull the trigger,” said Lana Batts, a partner with Transport Capital Partners in Arlington, Virginia.
“Particularly for publicly traded companies, there is a sense that if you’re going to grow, you cannot grow by adding one truck at a time,” Batts said.
Running companies as stand-alone units keeps drivers in place with minimal changes, which they like, she said.
“The color of the trucks is not going to change. Drivers are not indentured servants, [and] anybody that buys a company has got to maintain those drivers,” she said.
With more federal regulations, larger carriers have a “lot more density to spread the costs across,” while smaller fleets “are going to have a terrible time trying to figure out how to maintain productivity, let alone improve it,” she said.
Batts also said Barr-Nunn had a “beautiful CSA score,” good hours-of-service compliance and excellent driver-
fitness and drug-and-alcohol ratings. “They’ve got a great safety department. This [deal] is not a fixer-upper.
