Omni Logistics takes Forward Air to court over merger delay
10 / 11 / 2023
Photo: Travel mania/ Shutterstock
Omni Logistics has filed a lawsuit against Forward Air in a bid to enforce the merger agreement between the two companies.
The merger agreement between the companies was announced in August, however, at the end of October, global multimodal provider of air, ocean and ground services Omni Logistics said it had filed a complaint in the Delaware Court of Chancery against Forward Air, regarding the incomplete deal.
Omni Logistics is seeking a legal ruling to force Forward Air, a provider of transportation services across the US, Canada and Mexico, to close the transaction, said a press release issued by Omni Logistics on October 31.
“Omni’s lawsuit seeks specific performance under the Agreement and Plan of Merger between Omni and Forward Air dated August 10, 2023 (the “Merger Agreement”), requiring Forward Air to comply with its obligations to complete the transaction,” said the release.
“The complaint also seeks a judicial declaration confirming that Omni has complied with all required provisions of the Merger Agreement. Omni has requested a trial before the Court of Chancery to obtain a ruling enforcing the Merger Agreement prior to the Merger Agreement’s outside expiration date of February 10, 2024.”
In conjunction with the complaint, Omni issued an open letter to the shareholders of Forward Air that stressed the merger would increase business prospects and reduce costs. The company said the merger would create “an all-in-one expedited LTL partner”.
“Omni believes Forward Air’s threat to terminate the transaction is unenforceable under our binding contractual agreement – and we are confident that no impediment exists to closing the transaction immediately,” said the company in the letter.
The letter further stated: “It is particularly notable that Forward Air’s earnings commentary on their call earlier today (October 31) heavily emphasized their desire to ramp up direct relationships with domestic shippers. In line with the view of one analyst on that call, it is unclear to us why Forward Air would now seek to convince their shareholders that they should significantly invest in organically growing their direct LTL business without having solved, by their own admission, for volume/price mix.”
The issues come after certain shareholders of Forward obtained a temporary restraining order related to the deal.
However, in late October, the restraining order was dissolved by the Third District Chancery Court sitting in Greeneville, Tennessee.
Following this, Forward issued a statement claiming that Omni had not complied with certain of its obligations under the Merger Agreement.
“Consequently, Forward believes the closing condition contained in Section 8.02(b) of the Merger Agreement will not be satisfied at the anticipated closing of the transactions under the Merger Agreement, and Forward will not be obligated to close.
“As a result, Forward is considering its rights and obligations under the Merger Agreement, including potentially exercising its right to terminate the Merger Agreement.”
