Highlights Powerful Strategic Rationale for
Combined Company, Shared Interests with Forward Air Shareholders,
and Highly Compelling Value Creation Opportunity
DALLAS, Nov. 17,
2023 /PRNewswire/ -- The Board of Directors of
Omni Logistics ("Omni"), a technology-driven provider of global
multimodal logistics solutions and specialized services, today
issued a public letter to shareholders of Forward Air Corporation
(NASDAQ: FWRD) ("Forward Air").
###
Dear Shareholders of Forward Air,
Much has been said about the combination of Omni Logistics and
Forward Air, particularly in the last few weeks. The Omni Board of
Directors believes it is important for Forward Air shareholders to
hear directly from us about who Omni is, the background of the
transaction, the compelling financial and strategic rationale, and
the go-forward plans for the combined company.
The proposed combination between Omni and Forward Air is rooted
in a simple yet powerful thesis: creating the premier global,
integrated provider of comprehensive logistics services. This was
the rationale articulated by both parties when the transaction was
announced in August, and it remains equally powerful today. We
believe that you – the owners of Forward Air – are poised to
realize significant upside by capitalizing on the enormous value
creation potential of the combined company.
As future significant shareholders in the combined company, our
incentives are fully aligned with yours. We remain deeply confident
in Omni and Forward Air's industry-defining potential together. Our
conviction has been reinforced by overwhelmingly positive feedback
from customers across the value chain, who are doing more business
with both companies since the transaction's announcement, in
anticipation of the unique value proposition our combined platform
will offer.
Why Are We Fighting for This Combination?
Our Board members have been involved with building some of the
most significant companies in the logistics industry. Throughout
our decades of experience, there has been one constant lesson – if
you take care of your customers, you will take care of long-term
stock value.
This transaction is the best answer for customers, and that is
worth fighting for. This combination represents a
once-in-a-generation opportunity to cause a seismic shift in the
industry and "change the model." It allows Forward Air to have a
direct relationship with the customer, instead of through an
intermediary. It removes a layer of cost and the customer wins.
We are not looking for a quick exit. The transaction is not for
cash – it is for equity in the go-forward combined company. We
believe in it, and we intend to be in it for the long haul.
Who We Are
Omni is the premier asset-light freight forwarder, with a robust
track record of growth and value creation. Omni has expanded its
customer count from 500 to approximately 7,000 customers over the
past eight years, and nearly two-thirds of the largest customers
rely on Omni for multiple services, with very high retention rates
– Omni's top 50 customers have an average tenure of more than 10
years. Omni has received numerous awards for its success in the
industry, including being named a top 100 logistics provider by
Inbound Logistics and Transport Topics, and its
leaders have been recognized with honors from outlets such as the
Dallas Business Journal and 3BL.
Omni is a privately held company, and its shareholders consist
of several highly experienced and well-capitalized institutional
investors with specific expertise in the transportation and
logistics sector. Collectively, Omni shareholders represent
billions of dollars in assets under management and decades of
experience building and growing leading companies. The shareholders
have invested through multiple cycles, have significant capital
available, and are 100% committed to ensuring the continued success
of the business, no matter the current industry dynamics or
economic climate.
Background to the Transaction
In early 2023, when Forward Air proactively approached Omni
about a strategic combination, the company was not for sale.
Numerous world-class logistics companies and investment firms have
reached out over the years seeking to acquire Omni. Omni's Board
did not pursue these opportunities because none of these options
would have enabled Omni to accelerate its growth faster than it
could on its own. However, the combination with Forward Air
represented a transformational transaction from the Omni Board's
perspective, which is why we responded to Forward Air's outreach
and worked in good faith towards a transaction.
Omni has long had tremendous respect for Forward Air, its
talented employees, and its customer service. The two companies
know each other well: Omni and Forward Air have maintained an
extensive commercial relationship for decades and share a common
view about the industry dynamics that are prioritizing integrated
solutions and direct customer relationships.
As part of its multi-year "Grow Forward" initiative, Forward Air
wanted to accelerate its ability to work directly with shippers,
since the majority of its current customer relationships are with
intermediaries like Omni – Forward Air's largest LTL customer. The
industry has been quickly evolving towards a more integrated
service model for customers. Forward Air has acknowledged the need
to expand its serviceable market by trying to build direct
solutions serving small- and medium-sized shippers that do not
otherwise work with forwarders.
At the same time, Omni was embarking on a multi-year growth
strategy centered on being the leading technology-enabled provider
of logistics solutions for customers with high-value freight, with
a focus on driving density and scale within its growing domestic
ground LTL network. A key aspect of Omni's strategy has been
continuing to build out Omni's proprietary LTL network, which has
enabled the company to win customers and lower their unit costs.
The opportunity to combine with Forward Air, the leading provider
of domestic expedited LTL services, would significantly accelerate
Omni's long-term growth strategy as well.
A Transformative Opportunity to Achieve Both Companies'
Strategies
Bringing together the most expansive LTL network for expedited
freight with the premier high-value freight forwarder checks all
the boxes for customers: we believe the combined company will offer
the best capabilities and quality of service, while eliminating a
meaningful layer of cost and complexity, to be the lowest unit-cost
provider. As any casual observer of the global supply chain would
note, the past few years of supply chain disruption and volatility
have accelerated customers' needs for increased reliability and
reduced costs. The new, vertically integrated company will be a
more efficient, differentiated, and indispensable partner to
shippers.
As a result, shareholders will have the opportunity to benefit
from opportunities that can only be achieved through this
transformative combination:
- Enhancing Forward Air's strategic position in the industry,
quickly and efficiently. By combining two highly complementary
businesses, we will create the definitive leader in domestic
expedited LTL as the lowest-cost, integrated provider of choice.
Supplementing its current focus on serving smaller shippers
directly, Forward will immediately access Omni's larger, blue-chip
direct shipper base in attractive end-markets, driven by Omni's
established commercial engine and track record of rapid organic
growth.
- Driving cross-sell advantage with complementary
capabilities. Omni has developed a differentiated cross-sell
commercial engine and go-to-market strategy that is dedicated to
offering integrated solutions to shippers, with a long track record
of success. The combined platform, along with its full suite of
complementary logistics solutions, will serve as a springboard to
accelerate cross-sell opportunities for high-value freight and
funnel more customers to its expedited LTL network.
- Creating the lowest-cost provider to customers across the
value chain. The combined platform represents a win for
existing customers as well as a significant segment of shippers
that does not currently procure expedited LTL through forwarders.
We believe concerns about alienating customer groups are misplaced,
as evidenced by customers' reactions since the announcement of the
transaction: Omni's LTL revenue pipeline from end-customers has
multiplied nearly fivefold, while Forward Air recently stated its
average daily volumes with domestic freight forwarders increased by
14%.
- Leveraging Omni's highly experienced leadership. Omni's
CEO, JJ Schickel, has extensive executive and board experience in
logistics and has built a diverse management team with decades of
expertise growing and integrating successful global logistics
businesses. In addition, the Omni Board collectively holds decades
of experience building leading logistics companies, and the
combined company will be supported by long-term, patient investors
with meaningful "skin in the game."
- Positioning to navigate industry headwinds. Logistics
companies have experienced a variety of challenges in recent years
between supply chain issues and customers' heightened cost
sensitivity. Without significant investments of capital, time,
focus, and hiring, it is challenging for any organization to
organically support an entire portfolio of solutions or offer a
unique, integrated value proposition of this scale. But together
Omni and Forward Air can do so almost immediately upon close. As a
combined platform, the company will be in a materially stronger
competitive position to achieve these objectives, adapt to the
rapidly evolving industry environment, and outperform the
market.
Achieving Long-Term Prosperity Together
Our belief in the power of the combination is not limited to
words on a page.
Based on the Omni shareholders' enthusiasm for Omni's standalone
value creation plan, and the compelling rationale of the
transaction with Forward Air, it was critical for the transaction
to be structured with meaningful equity consideration. This is not
a "cash out" deal – greater than 85% of the proceeds for Omni
shareholders is in Forward Air stock, which will result in Omni
shareholders becoming significant minority owners of the combined
company. This was intentional: Omni shareholders have strong
conviction in the value creation opportunity of the combination and
are placing a big bet on its future.
We empathize with Forward Air shareholders who have suffered a
loss in value since the announcement of the transaction. Based on
Forward Air's current trading levels, the equity value to Omni's
shareholders has declined by approximately $700 million in aggregate compared to the value
when the transaction was announced.[1] Despite this, Omni has not
sought to renegotiate or renege on the transaction. In fact, some
Omni shareholders have acquired additional shares of Forward Air
stock, underlining their conviction in the future combined
company.
Omni's Board consists of long-term and deeply committed
investors who strongly believe the combined company will have
numerous levers to meaningfully enhance shareholder value,
including:
- Unlocking substantial synergies, both immediate and
sustainable. The synergy opportunities from the transaction are
tremendous – and many are easily achievable within months of close.
After an extensive review, Forward Air and Omni have identified
$125 million in EBITDA cost and
revenue synergy opportunities. Nearly half of those synergies can
be executed on the cost side in the first six months. That is
immediate value readily realizable once the transaction is
completed.
- Achieving enhanced profitability targets. Vertical
integration will remove a layer of wholesale cost to capture the
full economic value of the combined company's differentiated LTL
network designed to move high-value freight on an expedited basis.
In our view, the pro forma combined company can achieve metrics
that will warrant a premium valuation relative to Forward Air's
current and historical levels.
- Executing on clear path to rapid deleveraging. We
carefully considered the combined company's leverage before
agreeing to the transaction. Our businesses are highly cash
generative, and Omni's asset-light model requires minimal capex.
Through synergy realization and other potential strategic
initiatives, the combined company will be well-positioned to
quickly deleverage following the closing.
Where Do We Go From Here?
The Omni Board remains 100% committed to closing the transaction
with Forward Air. We believe both businesses will achieve greater
value creation together and the combined company will be a leader
in a reshaped LTL industry, capable of serving customers in the
best way possible. We look forward to continuing the conversation
with you to maximize the potential of the future company and our
respective stakes in it.
The Omni Logistics Board of Directors
###
Omni is advised by Alston & Bird, LLP; King & Spalding
LLP; Wachtell, Lipton, Rosen & Katz; Potter Anderson &
Corroon LLP; Goldman Sachs & Co. LLC; and J.P. Morgan
Securities LLC.
About Omni Logistics
Omni Logistics is a global multimodal provider of air, ocean,
and ground services. Every supply chain solution is designed
according to each customer's specific freight needs, challenges,
and objectives, regardless of mode, time requirements, or cost.
Leveraging the expertise and advanced training of an expansive
global workforce in more than 100 locations, Omni Logistics focuses
on removing supply chain inefficiencies and providing low
cost-per-unit solutions to approximately 7,000 customers worldwide.
In addition to operating a full portfolio of multimodal solutions
both domestically and internationally, Omni Logistics manages a
robust portfolio of supplemental services for enterprises dependent
on the efficient movement of high value freight.
Forward-Looking Statements
This press release includes forward-looking statements that are
based on information currently available to Omni, Omni's beliefs,
as well as on a number of assumptions concerning future events.
Forward-looking statements are not a guarantee of performance and
are subject to a number of uncertainties and other factors, which
could cause the actual results to differ materially from those
currently expected. In providing forward-looking statements, the
company does not intend, and is not undertaking any obligation or
duty, to update these statements as a result of new information,
future events or otherwise.
Media Contact
Jeremy Fielding / Nathan Riggs / Mark
Fallati
Kekst CNC
KekstOmni@kekstcnc.com
1 Based on Forward Air's August 9 (day prior to the transaction
announcement) closing share price of $110.00 and November
16 closing share price of $64.76
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SOURCE Omni Logistics, LLC