Forward Air Corporation's (CCJ Top 250, No. 57) embattled acquisition of and merger with Dallas-based Omni Logistics is on life support.
With Omni’s more than 7,000 customers feeding Forward Air’s expedited LTL network, the merger would create an expedited LTL giant with more than 300 locations and unfurl a network flywheel for customers through the addition of Omni’s 40-plus strategically located terminals across the U.S. with Forward’s comprehensive network of terminals near or at U.S. airports. However, the deal has stumbled out of the gate since it was announced in August.
Several significant shareholders in late September filed a temporary restraining order to block the deal, saying it was not an acquisition of Omni, rather a $150 million merger that required a shareholder vote.
A Greeneville, Tennessee-based Third District Chancery Court on Wednesday did not grant the plaintiffs’ request for a temporary injunction relating to certain transactions contemplated by the merger agreement and declared the temporary restraining order dissolved, seemingly clearing the way for the agreement to proceed.
However, those shareholders could get their wish via a different route. Forward Air said Thursday that it believes that Omni has not complied with certain obligations of the merger agreement and therefore "believes the closing condition contained in Section 8.02(b) of the merger agreement will not be satisfied at the anticipated closing of the transactions under the merger agreement, and Forward will not be obligated to close," the company said in a provided statement. "As a result, Forward is considering its rights and obligations under the merger agreement, including potentially exercising its right to terminate the merger agreement."
Reached by CCJ Thursday, representatives for Forward Air declined to elaborate on which obligations the company believes Omni defaulted. The deal was expected to close by year end.
Ancora Holdings Group, a top shareholder of Forward Air Corporation, in a statement said it supports Forward Air’s decision to evaluate the termination of the transaction.
Omni, also via statement, refuted claims it hasn't abided by all required provisions of the agreement and plan of merger, saying it has "fully complied," adding it believes the merger agreement is legally binding "and intends to enforce the merger agreement and close the transaction as expeditiously as possible."
Headquartered in Dallas, Texas, Omni is an asset-light, high-touch logistics and supply chain management company, delivering domestic and international freight forwarding, fulfillment services, customs brokerage, distribution, and value-added services for time-sensitive freight to U.S.-based customers operating both domestically and internationally.
The combination of Forward Air and Omni would create a scaled, premier, high-value, less-than-truckload enterprise focused on providing customers with multimodal solutions for complex, high-service and high-value freight needs.
