Activist Ancora Pushes Forward Air to Pursue Sale

By Dean Seal

Activist firm Ancora Holdings sent a letter urging Forward Air's board of directors to engage with prospective buyers after a decade of underperformance.

Ancora said Tuesday that the U.S. trucking company needs to initiate a review of its sale options now that the private equity firm Clearlake Capital has expressed interest in engaging with the board about strategic alternatives.

Holders of about 22% of Forward Air's outstanding shares have already independently disclosed support for a strategic review, according to Ancora, which has a 4% stake in the company.

Clearlake Capital disclosed earlier this month that it had built a nearly 14% stake in Forward Air and wanted to talk with its board about opportunities to increase shareholder value. In May, The Wall Street Journal reported that activist investor Irenic Capital Management had built a nearly 5% stake in the company and privately called for a board shakeup as well as a strategic review.

Shareholders have been agitated since Forward Air was forced to complete a $3.2 billion acquisition of Omni Logistics in January, even after Omni's business deteriorated and shareholders questioned the structure of the agreement.

Ancora is urging the board not to use the legal and financial advisers that guided the Omni deal as it considers its next steps.

"It would undermine the credibility of any process to use the same professionals who profited from and supported the value-destructive acquisition of Omni," Ancora said.

Ancora argues that Forward Air would need to execute flawlessly on its deal-related synergies, cut excess costs, fix its highly levered balance sheet and grow profitably if its intends to remain a public company, but that the current management remains "shackled to many of prior management's questionable decisions."

"Our analysis suggests that a sale to one of the many well-capitalized buyers likely to engage in a process would deliver a meaningful premium relative to where Forward Air's shares have traded before and after sale-related speculation started in late May," the firm said.

Forward Air shares rose 2% to $31.72 in early trading.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

August 20, 2024 10:41 ET (14:41 GMT)

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