Forward Air is a transportation company that provides various services across North America, Europe, and Asia. The company specializes in expedited less-than-truckload markets, offering cost-effective alternatives to traditional air freight. Ancora, an activist investment firm, has been involved with Forward Air for nearly four years. Ancora initially focused on improving capital allocation, cost-cutting, and shedding non-core assets. However, recent events, such as the acquisition of Omni Logistics at a high multiple, have led to renewed activist involvement.
Ancora’s involvement with Forward Air has been characterized by a mix of long-term oriented initiatives and short-term opportunistic engagements. The firm’s history at Forward Air includes successful campaigns focused on business improvement and collaboration. However, recent actions, such as calling for the sale of the company without detailed analysis on alternative paths to value creation, have raised concerns about the firm’s motivations.
Forward Air faces significant challenges, including an over-leveraged balance sheet and bloated selling, general, and administrative expenses. The recent acquisition of Omni Logistics at a high multiple has further strained the company’s financial position. Ancora has criticized the deal as entrenching management and the board, leading to excessive compensation levels.
Potential Paths to Value Creation
Ancora’s call for a sale of the company reflects a belief that the most effective way to unlock value is through a private transaction. The firm argues that selling off non-core assets and restructuring operations would be best done in a private setting. Private equity funds, such as Clearlake Capital, have expressed interest in engaging with the board about strategic alternatives.
Multiple investors, including Ancora, Clearlake Capital, and Irenic Capital, have built significant stakes in Forward Air. Ridgemont Equity, a major stockholder, holds the key to a potential sale of the company. Ancora has two potential avenues to force a sale – persuasion or a proxy fight. The company’s large debt load presents a potential roadblock to a private equity acquisition.
Forward Air’s recent performance and activist involvement highlight the challenges and opportunities facing the company. Ancora’s call for a sale of the company reflects a belief that private ownership would best position Forward Air for long-term success. The company’s response to activist pressure and potential acquisition scenarios will be key factors in determining its future direction.