Forward Air Files Counterclaim Against Omni on Merger
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Omni ranks No. 38 on the Transport Topics Top 100 list of the largest logistics companies in North America. Forward Air ranks No. 27 on the for-hire TT100.
Omni filed the lawsuit Oct. 31 in an effort to push the merger through. Both companies had agreed to combine in a deal inked Aug. 10. Forward later issued a notice claiming it was not obligated to close the deal because Omni was not upholding its obligations. It also is considering terminating the deal. Both complaints were filed in the Delaware Court of Chancery.
“Because of Omni’s continuous delays and repeated misrepresentations, Forward no longer believes Omni to be acting in good faith with respect to the merger agreement,” Forward Air said in a statement Nov. 13. The motor carrier added that it believes the closing conditions contained in a merger agreement “will not be satisfied at the anticipated closing.”
Forward is seeking an order from the court declaring that it is not obligated to close the deal and is entitled to terminate it. The company filed its counterclaim Nov. 10 and said it intends to file a public version by Nov 17. Omni responded by calling the counterclaim baseless.
“Omni categorically denies the claims made in Forward Air’s counterclaim,” Omni said in the response Nov. 13. “Omni has complied with all the required provisions of the agreement and plan of merger between Omni and Forward Air dated August 10, 2023 (the “Merger Agreement”). Omni has also worked diligently and cooperatively with Forward throughout the merger process to close the deal. Any attempt by Forward Air to suggest otherwise is baseless.”
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Omni reiterated its belief that the merger agreement is legally binding. The company in its original complaint said that it is seeking a judicial declaration confirming that it has complied with all required provisions related to the merger agreement. It also is requesting a trial date in advance of the agreement’s outside expiration date of Feb. 10. The company, too, has issued an open letter to Forward Air shareholders stressing that it believes the merger is strategically wise.
“The industry has been evolving towards a more integrated service model for customers, accelerated by the supply chain disruptions and heightened customer focus on cost and efficiencies that have marked the past few years,” Omni said in the letter. “That evolution underlies the fundamental strategic logic at the core of our transaction: Combining Forward Air and Omni enables our two companies to meet the evolving needs of customers.”
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Forward Air investor Ancora Holdings Group accused the deal of being intentionally structured to avoid a preclosing shareholder vote and said it was too expensive. Some shareholders also obtained an ex parte temporary restraining order during an effort to impose a temporary injunction against aspects of the transaction. The Third District Chancery Court in Greeneville, Tenn., rejected the request and dissolved the restraining order Oct. 25.
“Terms of the convertible preferred stock effectively coerce shareholders to vote in favor of conversion,” Ancora said in a report issued Oct. 26. “[It is] self-entrenchment by adding four Omni-designated directors to combined company’s board and cementing an [approximate] 38% voting block that is contractually required to vote in favor of directors nominated by the board.”