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Swift rejects purchase offer from ex-CEO

SHARE Swift rejects purchase offer from ex-CEO

Swift Transportation Co., the second-largest U.S. trucker, rejected an unsolicited $2.17 billion purchase offer from former Chief Executive Officer Jerry Moyes and will begin talks with him and other suitors.

Moyes, Swift's largest shareholder, proposed three weeks ago to buy the Phoenix-based company for $29 a share and take it private. A Swift board committee that analyzed the offer called it "inadequate," the company said in a statement Monday.

"We haven't heard the last from Jerry," said Rick Paterson, an analyst with UBS Securities in New York, who rates the shares "neutral" and doesn't own any. "He gave a lowball number so that he could negotiate higher from there."

Moyes is attempting to regain control of the company he co-founded 40 years ago as sales for truckers decline. Swift said last month that excluding fuel surcharges, third-quarter revenue declined 3.3 percent. YRC Worldwide Inc., the biggest U.S. trucking company, reduced its full-year profit forecast last month, citing a slowing economy.

Monday's announcement marked the first sign that Swift is considering a sale.

Moyes, 62, co-founded Swift with a single truck to haul steel. The company last year had about 18,000 tractors and 52,000 trailers in North America and $3.2 billion in sales.

The trucker hasn't posted an annual loss since first issuing shares in 1990. Swift earned $101.1 million last year and reported profit of $116.5 million in the first nine months of 2006.

Dave Berry, a Swift vice president, said the company had no further comment. Moyes didn't return voice messages left at his office in Phoenix and on the general voice mailbox of the Phoenix Coyotes of the National Hockey League. He is the team's majority investor.

Shares of Swift have risen 18 percent since Moyes made his offer. They were up 75 cents, or 2.7 percent, to close at $28.36 Monday in Nasdaq Stock Market trading.

Moyes' initial offer represented a 21 percent premium to the stock's closing price on Nov. 3. When he made the proposal, Moyes said he might increase his bid after reviewing Swift's financial records.

"Twenty-nine dollars was never going to be enough," Paterson said in a note. "Swift is now discussing a more realistic price."

Moyes, a Swift board member, has a 26 percent stake. Ronald Moyes, his brother, holds 12 percent of shares outstanding.

Swift said in July it was concerned Moyes would try to seize majority control of the company without paying an "appropriate" premium. The trucker said it would require an all-cash offer or stock swap for all shares to ensure shareholders receive equal compensation.

Moyes said in a Nov. 6 Securities and Exchange Commission filing that he received a $2.73 billion financing commitment from Morgan Stanley to buy Swift.

The financing probably was set up to allow another $1 to $2 a share increase to the $29 bid, said Thomas Wadewitz, an analyst with J.P. Morgan Securities, in a note to investors.

"A deal with Jerry Moyes remains a likely outcome," said Wadewitz, who rates the stock "neutral." Other strategic or private equity buyers are unlikely, he said.

There is no timetable for the talks with Moyes or other parties, and Swift said it doesn't intend to comment further until a sale is approved or the company decides not to sell.

"There can be no assurance" of a sale, Swift said.

Moyes paid $1.25 million to the U.S. Securities and Exchange Commission in September 2005 to settle a case accusing him of insider trading. He didn't admit or deny wrongdoing, and stepped down as chairman and CEO of Swift in October 2005.

The accusation related to his purchase of 187,000 Swift shares in May 2004, two days before the company announced better-than-expected earnings and the stock jumped 20 percent. The transaction gave him an unrealized profit of $622,000.

In January, Moyes and some family trusts agreed to buy out other shareholders of Central Freight Lines Inc., a regional trucker based in Waco, Texas, and take the company private. The company endorsed the move. It hasn't announced results of last week's vote on the proposal.

Moyes is also a limited partner in Major League Baseball's Arizona Diamondbacks, according to the Coyotes' Web site.


Contributing: Greg Bensinger