Forward Air indicates planned acquisition of Omni Logistics may not come to fruition

Earlier today, Greenville, Tenn.-based asset-light freight and logistics services provider Forward Air served notice that it may not go through with its planned acquisition of Dallas-based Omni Logistics, an asset-light, high-touch logistics and supply chain services provider, which was announced in August and expected to close later this year.

When the proposed transaction was initially announced in August, Forward said that the companies’ generated roughly $3.7 billion in adjusted revenue through the 12-month period ending June 30, 2023, adding that Omni shareholders will receive $150 million in cash and Forward common stock, as per terms of the agreement. The transaction was expected to be made official later this year and was approved by the Boards of Directors of both companies.

In a statement issued today, Forward said that it believes that Omni has not complied with certain obligations of the merger agreement, adding that it believes the closing conditions of the agreement “will not be satisfied at the anticipated closing of the transactions under the Merger Agreement, and Forward will not be obligated to close,” and “As a result, Forward is considering its rights and obligations under the Merger Agreement, including potentially exercising its right to terminate the Merger Agreement.”

This development was strongly endorsed by Ancora Holdings Group LLC, a top shareholder of Forward Air.

“We are very pleased with Forward Air’s decision to be transparent with shareholders by disclosing its belief that Omni has not complied with aspects of the previously announced merger agreement,” said Frederick D. DiSanto, Chairman and Chief Executive Officer of Ancora, and James Chadwick, President of Ancora Alternatives LLC, in a statement. “In light of this, we—and presumably a critical mass of our fellow shareholders—fully support leadership’s decision to explore a termination of the merger agreement. Given that the proposed transaction has faced legal challenges and overwhelming market opposition, the Board of Directors is right to be diligent in holding Omni accountable for any and all non-compliance with the agreement’s terms. We urge the Board of Directors to take whatever steps are needed to protect the long-term interests of the enterprise while restoring and preserving shareholder value. In our view, terminating the prospective transaction with Omni is a logical and necessary step at this point in time.”

Established in 2000, Omni provides shippers with various offerings, including domestic and international freight forwarding, fulfillment services, customs brokerage, and distribution and value-added services for time-sensitive freight to U.S.-based companies on a domestic and international basis.

The companies cited myriad benefits of this transaction, in August including:

• creating a scaled, premier, high-value, less-than-truckload enterprise focused on offering shippers with multimodal solutions for complex, high-service and high-value freight needs;
• 全方位整合最先进的商业engine providing Forward with access to more than 7,000 customers, an increased domestic footprint, and a full portfolio of logistics services, multimodal operations, and supply chain services; and
• Omni’s customers seeing benefits from Forward’s Precision Execution, providing customers with some of the fastest industry transit times, on-time performance, and lowest claim rates, among other benefits

A key strategic benefit of this transaction identified by the companies includes advancing category leadership in expedited LTL freight in the roughly $15 billion expedited LTL total addressable market, with Forward servicing $1 billion of this market. They added that the combined company will see benefits from a direct-to-market salesforce and increased footprint.

Other cited strategic benefits included: the combined company offering complementary services, including expedited services, intermodal transfer, truckload brokerage, and warehouse and distribution capabilities, coupled with the long-term growth of Forward’s LTL business being a competitive differentiator for the combined company; enhancing platform scale; combining industry-leading teams; expanding its geographic footprint and capacity to better serve the its LTL network; and expanding Forward’s expedited freight customer base.

As for Omni, the company said that it fully complied with all the required provisions of the Agreement and Plan of Merger between Omni and Forward Air dated August 10, 2023.

“Any attempt by Forward Air to suggest otherwise is unfounded and has no basis,” the company said. “Omni believes the Merger Agreement is legally binding and intends to enforce the Merger Agreement and close the transaction as expeditiously as possible. Omni remains fully confident that uniting Omni and Forward Air as the premium expedited LTL provider will ensure that the combined company is best positioned to compete and win in an increasingly dynamic industry environment for the benefit of both companies’ shareholders, customers, and employees.”

In an August interview with LM, Forward Air Chairman, President and Chief Executive Officer Tom Schmitt explained that, in Omni, Forward saw a company that it considered the best in selling high-value freight to shippers.

“And that's where it dawned on us, and it dawned on them that we are the best operations machine in handling high-value freight,” he said. “They are the best commercial machine selling high value freight. If you put the two of them together, you have a powerhouse that should be the lead category leader in North America handling high value freight from the selling process all the way to getting it to peoples’ destinations. And, so, we just being in the industry, saw something here, where you could get those two complimentary halves—operations excellence and commercial engine—together. And they have been a good growing customer of ours. This is why we know that their freight focus is the same as ours. And that's why we know that in watching them and working with them, they're one of our top five largest LTL customers today. So, we know them quite well, and the first-hand experience, in terms of best-in-class operations and best-in-class commercial is not something that we know through somebody else about. We actually have worked with this company firsthand for the last several years.”

And he said that the deal's value-add for shippers comes in the form of what he called a very strong value proposition.

“The value proposition is very simple,” he said. “We are among the fastest on big lanes, on-time performance and low damages claims. So…when you ship medical equipment that, in some cases, costs several hundreds of thousands of dollars, or when you ship touring equipment for national tour tours by artists throughout the country, there's a zero propensity and no tolerance for damages or for being late. For those types of value propositions, we now have a chance to get in front of those customers directly and say, 'when you have a shipment of consequence where being on time and payment being fast and having absolute best probability for intact shipments, choose Forward Air.' And that's the conversation we can now directly have once we close this transaction and become one with Omni you can that conversation directly with thousands of customers.”