This story has been updated to include a statement from Forward Air.
Alternative asset manager Alta Fox has called on the beleaguered board of Forward Air to engage in a formal sales process following the company’s contested merger with Omni Logistics earlier this year. Alta Fox joins other Forward shareholders in suggesting the best path for the company is to seek new ownership and management.
Clearlake Capital, which holds a 14% equity interest in Forward (NASDAQ: FWRD), flipped from a passive investor to an activist investor in August, saying it may call on the company to review strategic options. Other investors like Irenic Capital and Ancora Advisors, which collectively hold 7% of the company’s equity, have pushed for similar change in recent months.
Alta Fox has a 3% stake in Forward.
“Do not confuse our stake as a vote of confidence in the Company’s Board and leadership. On the contrary, we view your disastrous track record of ignoring shareholders’ views as abhorrent,” a Monday letter to Forward’s board stated. “However, you have an opportunity now to do the right thing by listening to resounding investor feedback and executing a formal sales process that maximizes value for all shareholders.”
The letter said that in addition to roughly 25% of the company’s holders publicly calling for a change, other private equity firms holding Forward’s shares underscore “external confidence in a sale scenario.”
Shares of FWRD fell roughly 90% from the time the deal was announced in August 2023 to a May 2024 nadir of $11.21 per share. The stock has rallied to $36.76 (Monday at 10:50 a.m. EDT) since, but much of the move has been tied to speculation that the company could be purchased at a premium to its current price.
The deal’s announcement met backlash from shareholders, who said they should have been given a vote on the acquisition. Some questioned the high price tag for Omni given its debt load and voiced concern that the deal would put Forward in direct competition with legacy customers.
Forward has revamped its leadership team, made changes to the board and refocused on the revenue and cost synergies it says its new platform will deliver. However, the changes don’t appear to be enough to quell investor concerns.
“Let’s be clear: the debacle of the Omni Logistics LLC acquisition was a failure of your leadership,” Monday’s letter said. “Replacing the CEO and tinkering with Board composition does not absolve the majority of you who stood by while shareholder value has been destroyed.
“Your misguided capital allocation and reckless oversight have caused irreparable damage to Forward Air. Do not compound your failures by continuing to ignore your shareholders and risk further tarnishing your credibility as public company directors – even after this saga concludes.”
The letter said a sale could “unlock the Company’s full potential” and “help reverse damage” caused by the acquisition.
Shares of FWRD were up 3.9% at 10:50 a.m. EDT on Monday compared to the S&P 500, which was off 0.3%.
Forward Air issued a statement regarding the matter after the market closed on Monday.
“The Forward Air Board of Directors and management acknowledge and value the perspectives of the Company’s shareholders,” the statement read. “The Company has recently undergone a significant transformation, including substantially refreshing its Board and management team, and is focused on continuing to provide industry leading service and executing its strategic plan with a renewed sense of continuous improvement, transparency and accountability.
“The refreshed Board and management team are actively analyzing the business and strategy to ensure the Company pursues the best path forward to enhance shareholder value.”