Forward Air is a company that provides asset-light transportation services, including LTL, truckload, intermodal drayage, freight brokerage, and supply chain services in North America, Europe, and Asia. With a stock market value of $884.7 million, Forward Air has been in the crosshairs of activist shareholder Ancora, which owns approximately 4% of the company.
Ancora, a family wealth investment advisory firm and fund manager with $9.5 billion in assets under management, has a history of engaging in activist efforts in various sectors. From 2010 to 2020, Ancora focused on micro-cap companies but has recently expanded its scope to larger companies with sub-5% stakes. Ancora’s tactics include private and public engagement with portfolio companies to drive corporate governance improvements and long-term value creation.
Ancora began its involvement with Forward Air in 2020, eventually settling for two board seats in 2021 after a campaign focused on capital allocation and cost-cutting. The company’s stock price saw an increase to over $120 per share, leading to a successful exit by Ancora in 2022 with a 58.63% return. However, by late 2023, Forward Air’s stock price began to decline, prompting Ancora to become a top shareholder once again.
Forward Air’s stock took a hit in 2023 following the announcement of the acquisition of Omni Logistics at a high multiple. Ancora opposed the deal, citing concerns about excessive compensation and lack of shareholder input. Despite Ancora’s objections, the deal was closed in early 2024, leading to a further decline in Forward Air’s stock price. Ancora, now back as a top shareholder of the company, is advocating for the sale of Forward Air to unlock value.
Ancora believes that Forward Air’s management team and board face challenges in executing a successful turnaround due to the Omni Logistics acquisition and its impact on the company’s financials. The firm argues that selling off non-core assets and restructuring operations would be best done in a private setting. Additionally, private equity firm Clearlake Capital has expressed interest in engaging with the board about strategic alternatives, potentially putting Forward Air in play for an acquisition.
Ancora has two avenues to push for a sale of Forward Air – through persuasion or a proxy fight. The firm would likely need the support of other major shareholders, such as Ridgemont Equity, which holds two board seats at Forward Air. However, Ridgemont’s stake in the company and its history with Omni Logistics may influence its stance on a potential sale. The large debt load of approximately $1.6 billion poses a challenge to a private equity acquisition, as interest payments could limit cash flow.
The battle for the future of Forward Air continues as activist shareholder Ancora pushes for a sale of the company to unlock value for shareholders. With competing interests from major shareholders and private equity firms, the outcome of this battle remains uncertain. Ultimately, the fate of Forward Air will depend on how the company’s management and board respond to the demands of activists and potential acquirers.
Leave a Reply