In the wake of Forward Air Corporation’s attempt to renege on a $3.2 billion merger with Omni Logistics, a new player threw yet another wrench into the messy proposed takeover.
Ancora Holdings, which owns a roughly 3 percent share in Forward Air, lambasted Omni Logistics for what it claims is an “intimidation campaign” against the wealth management firm via subpoenas and document requests from the logistics company’s counsel.
According to the activist investor, Omni has made “efforts to suppress opposition” and has been “sending legal missives” to the company, courtesy of law firm Wachtell, Lipton, Rosen & Katz. Ancora did not comment on the details of its allegations.
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“We believe Omni’s response of unleashing an army of aggressive law firms on a top shareholder of Forward Air for vocalizing our concerns is not only shameful, but telling of the desperate state Omni finds itself in today,” the company wrote in an open letter to Omni Logistics. “Ancora does not take to intimidation tactics kindly.”
Forward Air Corp. did not comment on the matter. Sourcing Journal reached out to Omni Logistics and Wachtell, Lipton, Rosen & Katz.
The hedge fund unveiled a presentation in October that called for Forward Air to replace CEO Tom Schmitt and some of its board members.
Dr. Tom Goldsby, professor and Haslam Chair of Logistics at the University of Tennessee’s Global Supply Chain Institute, told Sourcing Journal that the pressure from Ancora is likely the reasons for Forward Air’s recent about-face on the Omni deal.
“I don’t know that this is really so much market response—even though Forward’s share prices have declined markedly in the weeks since that (M&A) announcement,” Goldsby said. “The price tag itself seemed a bit steep to me, as trucking stocks are getting pummeled right now, in general, due to the flat freight market—even though volumes for many carriers are pretty much in line or elevated from pre-pandemic levels.”
Stock in Forward Air has plummeted 37 percent since Aug. 10, when the deal was first announced, down to about $65 per share as of Monday. Ancora said its plan could help get Forward’s stock back over $100 per share within six months, indicating that with a revamped board and C-suite that the company’s value could reach $140 to $145 per share in the intermediate term.
Ancora has been in this arena before, successfully calling for Pitney Bowes to replace CEO Marc Lautenbach in September. Last year, the firm called for Kohl’s to unseat then-CEO Michelle Gass and chairman Peter Boneparth, with Gass leaving to be CEO-in-waiting at Levi Strauss & Co. and Boneparth set to retire next May.
The deal itself has been contentious since day one, with Forward taking heat from shareholders, clients and employees alike.
In September, three former Forward Air employees filed a complaint in Tennessee to block the transaction on the grounds that they were shareholders and couldn’t vote on the deal in the state, with the state court temporarily implementing a restraining order on the deal. But the court reversed its decision the next month.
After the reversal—and amid the outcry from Ancora—Forward publicly changed its tune, saying it was considering terminating the deal because Omni Logistics failed to comply with certain obligations. On Oct. 31, Omni sued Forward to enforce the proposed merger.
Forward clapped back by countersuing, asking a Delaware court to let it out of the deal, reiterating its estimation that Omni has breached the agreement.
In that suit, publicly released Friday, the alleged breaches stem from Sections 7.03 and 7.14 in the deal. They require Omni to grant Forward Air “reasonable access to its books and records,” and “provide financial information promptly to Forward Air upon reasonable request.”
Forward Air said it was “in a materially worse position” due to the delay in receiving the requested financial information.
“Forward Air—without knowing the full and accurate extent of Omni’s outlook on its performance—negotiated a loan structure and loan terms that now appear to be inadequate for the transaction, as well as incompatible with the overall debt, leverage and risk profiles of the combined company,” the Forward lawsuit stated. “Furthermore, Omni’s refusal to provide July and August financial data caused the pricing of Forward Air’s debt financing to suffer.”
Omni has maintained that it has complied with all pre-closing requirements.
A Jan. 19 Delaware court date will hear the dispute between the two companies while the other group of Forward Air shareholders is still seeking the right to vote in a Tennessee court.
