Forward Air Corporation FWRD disclosed its decision to combine with Omni Logistics, LLC through a definitive cash-and-stock transaction.
The deal will create a combined company that generated adjusted revenue of around $3.7 billion of the combined company for the twelve months ended June 30, 2023.
As per the terms, Omni shareholders will receive $150 million in cash and Forward's common and preferred stock. The Forward stock consideration payable to Omni's shareholders will consist of common stock and a newly designated series of perpetual non-voting convertible preferred stock.
Forward expects the transaction to be accretive to cash EPS in year two following the close of the transaction.
The transaction is expected to close in the second half of 2023. Post closure, Omni shareholders will own 37.7% of the combined company on a fully-diluted, as-converted basis.
Forward currently intends to maintain its existing dividend to common shareholders.
"The combination of Omni with Forward creates a company positioned to achieve the full potential of our LTL business, provide a broad offering of complementary services to our customers, and deliver meaningful value for our shareholders....It accelerates our ability to make high-value, competitively priced freight accessible to more customers, all of whom will benefit from Forward's renowned Precision Execution." said Tom Schmitt, Chairman, President, and CEO.
Synergies: The combination will generate total run-rate EBITDA synergies of approximately $125 million.
Around up to $75 million of total anticipated run-rate synergies represent cost synergies, of which the company expects up to $60 million to be realized within the first six months post-deal closure, with full run-rate cost savings projected to be recognized by 2025.
The combined company is expected to capitalize on opportunities to realize up to $50 million in revenue-based EBITDA synergies, which are projected to be gradually realized in the first three years post-closure.
Earlier this month, FWRD reported Q2 FY23 revenue of $402.2 million, missing the consensus of $454.8 million, and EPS of $0.91, missing the consensus of $1.28.
As of June 30, 2023, FWRD's cash and equivalents stood at $18.3 million.
Price Action: FWRD shares are trading lower by 3.62% at $106.02 on the last check Thursday.
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