Dive Brief:
- LTL, truckload and brokerage services provider Forward Air is merging with Omni Logistics, the companies announced Aug. 10.
- The combined companies are projected to create a $3.8 billion brokerage and LTL services giant with a national warehouse and distribution network once the deal closes later this year, the companies said. The deal has been approved by each company board of directors but still awaits regulatory acceptance.
- Forward Air Chairman, President and CEO Tom Schmitt in a statement said the merger “accelerates our ability to make high-value, competitively priced freight accessible to more customers.”
Dive Insight:
While Tennessee-based Forward Air touted the synergies that would result through its combination with Omni and estimated $125 million in EBITA through cost savings and revenue enhancements, analysts were skeptical of the merger, which would double the size of Forward Air.
Forward Air followed up last week’s merger announcement with a supplemental presentation Sunday, reinforcing the move. It noted the combination “creates a scaled, premier, less-than-truckload (‘LTL’) enterprise focused on providing customers with multimodal solutions for complex and high-service freight needs.”
Through the deal, Forward Air said it will gain access to more than 7,000 Omni customers in high-growth, high-value end industries and a larger domestic footprint. It will also broaden Forward Air’s portfolio of logistics services to drive more freight into its LTL network, the company said.
Forward Air and Omni have worked together for years and already have a good understanding of each company’s strengths including service offerings, teams, geographic footprint and capacity, the company said. Forward Air noted that about 35% of Omni’s business comes from LTL freight, which should bolster its LTL business.
Network optimization through the merger should generate about 60% in savings, Forward Air said in its follow-up remarks. Additional savings would come through technology enhancements, facilities consolidation and insourcing Omni’s third-party domestic transport.
Shareholders with privately held, Dallas-based Omni will receive $150 million in cash and will own a 37.7% equity stake in the combined company. The companies said Schmitt will serve as chairman and CEO of the merged businesses while Omni CEO J.J. Schickel will become president and be appointed to the board.
Forward Air has grown through acquisition in recent years. In January, it announced its purchase of assets from LTL carrier Land Air Express for $56.5 million, which followed its purchase of drayage services providers Chickasaw Container Services in November 2022 and Edgmon Trucking in May 2022.
Though its merger deal with Omni hasn’t closed, Forward Air appears open to more opportunities.
“We always talk about [how] we want to grow in double digits,” Schmitt said during the company’s Aug. 3 earnings call. “But M&A is a big part of who we are and what we do, and we continue pursuing that.”
