Alternative asset manager Alta Fox is calling on Forward Air’s tumultuous board to initiate a formal sale process following the contentious merger with Omni Logistics. Earlier this year, the merger between Forward Air and Omni Logistics sparked controversy. Alta Fox, along with other Forward shareholders, recommends that the company’s best path forward is to seek new ownership and management.
Clearlake Capital, which holds 14% of Forward’s shares, shifted from a passive investor to an activist one in August, indicating it might push for a strategic review of the company. Other investors like Irenic Capital and Ancora Advisors, who collectively hold about 7% of the company’s equity, have also been pushing for similar changes over recent months.
Alta Fox owns 3% of Forward’s shares.
In a Monday letter to the Forward board, it was stated, “Do not mistake our shareholding as a vote of confidence in your board and leadership. On the contrary, we find your record of ignoring shareholder input abhorrent. However, you now have an opportunity to listen to strong investor feedback and execute a formal sale process that maximizes value for all shareholders.”
The letter noted that besides about 25% of company holders publicly calling for change, other private equity firms owning Forward shares emphasized the “external confidence in a sales scenario.”
From the announcement of the deal in August 2023 to when FWRD hit its low at $11.21 on May 24, 2024, the stock price fell by approximately 90%. Since then, it has rebounded to $36.76 (as of 10:50 AM EDT Monday), but this recovery is largely attributed to market speculation that the company could be acquired at a premium above its current price.
The deal announcement was met with opposition from shareholders who argued they should have had the opportunity to vote on the acquisition. Some questioned Omni’s high valuation, citing heavy debt and concerns over competition with Forward’s existing clients post-merger.
Forward has restructured its leadership team, replaced board members, and refocused on revenue and cost synergies it claims will come from the new platform. However, these changes appear insufficient to quell investor concerns.
“It must be clear that the failure of the Omni Logistics LLC acquisition is a failure of your leadership,” Monday’s letter said. “Replacing the CEO and slightly adjusting board composition does not absolve you of responsibility for the destruction of shareholder value.”
“Your misallocation of capital and hasty oversight have caused irreparable damage to Forward Air. Do not exacerbate your failures by continuing to ignore shareholders, which is a gamble with your reputation as public company directors—regardless of how this storm ends,” the letter stated.
The letter suggested that a sale could “unlock the full potential” of the company and help “reverse” the damage caused by the acquisition.
As of press time, Forward Air has not responded to requests for comment on this matter.
At 10:50 AM EDT Monday, FWRD’s stock price was up 3.9%, in contrast to a 0.3% decline in the S&P 500 index.
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Source Website: FreightWaves
