Cliff Beckham has been here before.
Beckham, chief financial officer at USA Truck, is dealing with a third public acquisition attempt of the Van Buren-based transportation company in the past six years. Beckham would not disclose the number of private discussions he has been privy to in addition to the three public ones, but this is hardly new territory as he nears his 20th year with USA Truck.
Liberate Technologies, a Silicon Valley, Calif ., software company, made a run at USA Truck in 2006, offering $21 per share in a deal valued at close to $240 million. Celadon, an Indianapolis-based competitor, ended a bid to merge in 2012 after USA Truck executives declined to meet for face-to-face negotiations.
Now Knight Transportation of Phoenix holds a more than 12 percent stake in USA Truck and has openly discussed its desire to purchase the remaining shares of USA Truck. Knight offered a deal valued at $242 million, including payment of $9 per outstanding share.
While no two takeover or acquisition attempts are alike, Beckham said past takeover-attempt experiences are valuable.
“You come to understand it’s a process that takes time to unfold,” Beckham said. “It’s not an event where you have a clear beginning and ending. You have to let the process take its course.”
Knight first approached USA Truck in February 2012 to discuss a possible merger. Beckham was CEO and president at the time, a role that he stepped away from in February of this year. John Simone took over as company head, but Beckham remained on the management team and USA Truck board of directors.
USA Truck rejected Knight’s most recent offer in August. Knight made its efforts public in September and has continued its pursuit.
Beckham, who transitioned back to CFO in February after more than 5½ years as CEO and president, has been with USA Truck since 1994. His time with the company, particularly the experience in dealing with unwanted suitors, has helped decrease anxiety associated with plotting the company’s defense, he said.
Minimizing those feelings for employees or their families is more difficult. USA Truck employs close to 3,000 people, 500 of them in the Van Buren and Fort Smith area. Simone, who has extensive experience in company turnarounds, and Beckham have met with local employees and engaged with distant employees in other ways over the past few months, Beckham said.
“They don’t have the benefit of that knowledge and the experience,” Beckham said. “We worry about our people. Our drivers, our technicians on the shop floor. Our frontline people that have to worry about this over the dinner table.There’s nothing we can do but reassure them.”
Beckham’s institutional knowledge and relationship with employees are likely pluses, but his transition from CEO back to CFO is unusual, according to David Becher, an associate professor of finance at Drexel Uni-versity and a distinguished fellow at the University of Pennsylvania’s Wharton College, who studies public bids for publicly traded companies.
Research by Becher includes 5,300 public offers made between 1990-2008. Finding a similar situation where a CEO has willingly stepped into a subordinate’s role and remained so heavily involved in management decisions or a takeover defense would be difficult, according to Becher.
“It’s a unique situation, and I find that fascinating,” Becher said. “I don’t know of many cases where that happens. … It seems that he’s still there for a reason, though.This is the big takeaway for me when looking at the situation.”
Beckham, who worked his way up from newly hired staff accountant to CEO in 13 years, has plenty of familiarity with USA Truck cofounders and former company heads James Speed and Robert Powell.
Speed and Powell hold a combined 1.88 million shares, close to 17 percent of the company. Both have been traditionally opposed to selling, and Knight would likely needto convince either of them that selling was in their best interest. Since Knight’s offer of $9 per share, USA Truck has traded as high as $14.25, and two more entities have taken at least a 10 percent stake in the company.
Stone House Capital LLC of New York owns 1.3 million shares. Baker Street Capital of California purchased 1.4 million shares. Grace & White Inc. has increased its stake in the company to 1.1 million shares.
Company insiders view the increased stock value as a sign that the turnaround is succeeding. USA Truck, which posted $30 million in losses over eight consecutive quarters, cut its third-quarter losses to $600,000.
That was a significant improvement from a $6.1 million loss for the third quarter in 2012.
Simone has said the company could be profitable again as soon as the fourth quarter.
Focusing on the turnaround, and not the outside interest, is where management wants time spent. That is the best way to create value for shareholders, Beckham said.
“Our management team is very focused on the business,” Beckham said. “Most of our communication is about how we are continuing to execute our turnaround plan.”
Business, Pages 75 on 11/10/2013