This story was updated at 10:13 a.m. ET, Oct. 2, 2015.
In the latest example of consolidation at the top of the U.S. trucking industry, Knight Transportation acquired Barr-Nunn Transportation, a $119.8 million trucking company with about 550 tractors based in Granger, Iowa. The acquisition will push Knight’s operating revenue above the billion dollar bar and deliver more business, capacity and drivers.
The $112.4 million acquisition is the latest in a series of buyouts by large trucking companies, including Heartland Express, Swift Transportation, Celadon Trucking and Roadrunner Transportation. Increasingly, these acquisitions transform the purchasing carriers into holding companies, with added revenue and profit flowing back from subsidiary operations.
In an era when trucks are expensive and truck drivers increasingly scarce, acquisitions, but not necessarily mergers, are proving the quickest and surest route to motor carrier growth.
“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,” Kevin P. Knight, chairman and CEO of Phoenix-based Knight Transportation, said.
“We do not intend to integrate Barr-Nunn into Knight Dry Van or to change the personnel, policies, compensation, or spirit that have contributed to a very successful business,” he said.
That decision surprised transportation analyst John G. Larkin. "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," the Stifel managing director said in an Oct. 2 note to investors.
With $969.2 million in total revenue in 2013, and more than $800 million in trucking revenue, Knight is the 11th largest U.S. truckload carrier, according to SJ Consulting Group. In Barr-Nunn, Knight bought “a well-run company with good profit margins,” Satish Jindel, president of the research firm, said. “It’s a good deal and a good price for Knight.”
Barr-Nunn was founded by Robert Sturgeon in 1982, when the truckload industry exploded onto the map following trucking deregulation in 1980. The dry van carrier operates mainly in the eastern half of the U.S., hauling consumer products as well as industrial goods and materials. “In today’s economy, many trucking operations may come and go,” Barr-Nunn says on its website. “But when you work with Barr-Nunn Transportation, you can rest assured that we’re here for the long haul, and we’ll be here for many miles down the road.”
Now Knight’s backing will help keep Barr-Nunn rolling and growing. That’s something some mid-sized to smaller carriers find it increasingly hard to do on their own, Jindel said. “I think you will see similar deals getting done in the next six months to a year,” he said.