Forward Air Corporation and Omni Logistics, LLC, a private company that is majority owned by Ridgemont Equity Partners (“Ridgemont”) and EVE Partners, LLC (“EVE”), today announced that they have entered into a definitive agreement under which Forward and Omni will combine in a cash-and-stock transaction, creating a combined company that generated approximately $3.7 billion of combined company adjusted revenue for the twelve months ended June 30, 2023. Under the terms of the agreement, Omni shareholders will receive $150 million in cash and Forward common stock and preferred stock as described below.
Omni, headquartered in Dallas, Texas, is an asset-light, high-touch logistics and supply chain management company with deep customer relationships in high-growth end markets. Omni delivers 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 and Omni creates a scaled, premier, high-value, less-than-truckload (“LTL”) enterprise focused on providing customers with multimodal solutions for complex, high-service, and high-value freight needs. The combined company will be a provider of choice and expects to compete for an increasing share of high-quality freight transportation amidst a dynamic market in which customers are seeking a more reliable LTL solution. The combined company will also benefit from a meaningfully enhanced financial profile, with higher growth and significantly increased revenue underpinned by numerous cost- and revenue-based EBITDA synergy opportunities. Both the Forward and Omni businesses have a proven track record of growth and will be defined by the combined company’s focus on customer experience and efficiency.
The integration of Omni’s state-of-the-art commercial engine will provide Forward with access to more than 7,000 customers, an increased domestic footprint, and a full portfolio of essential logistics services, multimodal operations, and supply chain services. In turn, Omni’s customer base will benefit from Forward’s Precision Execution, which provides customers with the fastest transit times, best on-time performance, and lowest claims rates in the industry.
Tom Schmitt, Chairman, President and Chief Executive Officer of Forward, said, “The combination of Omni with Forward creates a company positioned to achieve the full potential of our LTL business, provide a broad offering of complementary services to our customers, and deliver meaningful value for our shareholders. Bringing together our organizations is a key stepping stone of the fourth and final phase of our Grow Forward journey to focus on high-value freight, develop an efficient operating network, implement strategic pricing discipline, and drive an expanded customer base. It accelerates our ability to make high-value, competitively priced freight accessible to more customers, all of whom will benefit from Forward’s renowned Precision Execution. Importantly, Forward and Omni already share a relentless focus on delivering best-in-class service to our customers, and we are excited to advance that reputation together. We also believe the combination will allow us to unlock significant growth through enhanced scale, execution, and operational synergies. We look forward to benefitting from Omni’s unique capabilities and expertise and to bringing even greater value into the expedited freight marketplace.”
Craig Carlock, Lead Independent Director of Forward, said, “By uniting these two complementary businesses, the combined company will be well-positioned to meet the unique and evolving needs of a diverse and growing customer base while delivering enhanced value for our shareholders. We are eager to welcome J.J. Schickel as President and a member of our Board following the transaction close and expect to benefit from his insights both as a Forward customer and operator. The Forward Board is confident in the value potential inherent in this combination and excited for the benefits it will bring to our key stakeholders.”
J.J. Schickel, Chief Executive Officer of Omni, stated, “Omni has a proven track record of solving highly complex supply chain challenges through deep industry expertise, advanced proprietary technology, and a multi-disciplinary commercial engine that delivers bottom-line value to customers. We are excited to have found in Forward a like-minded partner who shares our commitment to strong customer relationships and unrivaled service, central tenets of our success in growing our customer base from 300 to 7,000 over the last five years. I am very proud of what Omni accomplishes daily for our customers and am thrilled to bring our companies and teams together to achieve the full potential of our combined force.”
In connection with the transaction, Forward and Omni will each contribute their operating assets to a newly formed partnership that is a subsidiary of Forward. Certain Omni shareholders will hold their economic interest in the combined entity through the newly formed partnership. Omni shareholders will receive a combination of stock consideration and $150 million in cash.
The Forward stock consideration payable to Omni’s shareholders will consist of common stock and a newly designated series of perpetual non-voting convertible preferred stock. The shares of such preferred stock will be automatically converted into Forward common stock upon receipt of the approval of Forward shareholders in a shareholder vote to be held following the closing of the transaction. At the closing of the transaction, Omni shareholders will own 37.7% of the combined company on a fully-diluted, as-converted basis. Ridgemont and EVE will retain material ongoing ownership in the combined company and have agreed to certain lock-up and standstill provisions with respect to their equity ownership of Forward stock.
Forward has obtained commitments for up to $1,850 million of indebtedness consisting of term and bridge loans as well as an upsized revolving credit facility of $400 million. The proceeds of the $1,850 million of new debt will be used, together with cash on hand, to refinance existing indebtedness of Forward and Omni and pay the consideration and other amounts in connection with the transaction. The upsized revolver will be available to help fund the combined company’s working capital requirements going forward. The combined company’s leverage ratio is anticipated to be approximately 3.5x based on combined company adjusted EBITDA (inclusive of run-rate cost synergies) for the twelve months ended June 30, 2023, with significant liquidity available under the revolving credit facility.
The transaction has been approved by the Boards of Directors of both companies and is expected to close in the second half of 2023. The transaction is subject to the receipt of regulatory approvals and the satisfaction of other customary closing conditions.