Forward Air Announces Sale of Final Mile Business

Rhea-AI Summary

Forward Air Corporation (NASDAQ: FWRD) sells Final Mile business to Hub Group, Inc. for $262 million. Final Mile generated $289 million in revenue for the twelve months ended September 30, 2023.

Insights

Financial Analyst

The divestiture of the Final Mile business by Forward Air Corporation to Hub Group, Inc. represents a significant strategic realignment with a considerable cash inflow of $262 million. This transaction's valuation is noteworthy, as the Final Mile segment generated approximately $289 million in revenue over the past twelve months, suggesting a sale price just shy of the annual revenue figure. This could indicate a favorable deal for Forward Air, particularly if the Final Mile business was a lower-margin or non-core operation.

Investors should note the potential for enhanced focus on Forward Air's core business segments, which could lead to improved operational efficiencies and profitability. The capital injection may also provide liquidity for debt reduction, share buybacks, or reinvestment into higher growth or higher margin areas. However, the divestiture will result in a reduction of Forward Air's revenue base, which could impact future earnings unless offset by growth in remaining segments or cost savings.

Industry Analyst

From an industry perspective, the sale aligns with the trend of transportation and logistics companies optimizing their portfolio of services to focus on core competencies and improve shareholder value. The move by Forward Air suggests a strategic shift towards its 'Grow Forward strategy,' likely centered on its expedited freight and intermodal services. Hub Group's acquisition of the Final Mile business indicates an expansion of its non-asset logistics capabilities, particularly in the appliance delivery sector, which is described as 'best-in-class'.

For stakeholders in the logistics sector, this acquisition could signal increased competition in the final mile delivery market, especially in the appliance delivery niche. The transaction may also reflect the growing importance of scale and specialization in logistics as companies seek to meet the evolving demands of e-commerce and home delivery services.

Legal Expert

The involvement of Carlton Fields as legal counsel and Jewell Advisory Group as M&A advisor underscores the complexity of such transactions, which require careful due diligence and negotiation to address regulatory, contractual and integration challenges. The seamless transfer of approximately 640 employees to Hub Group will need to adhere to labor laws and may involve negotiations related to employee contracts and benefits.

Legal expertise is crucial in ensuring compliance with antitrust laws, particularly in an industry where consolidation can raise concerns about market power and competition. While the transaction appears to have proceeded smoothly, it is an example of the legal intricacies involved in M&A activities within the transportation and logistics industry.

GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ: FWRD) (the “Company” or “Forward”) is pleased to announce the sale of its Final Mile business to Hub Group, Inc. for an estimated total cash consideration of $262 million. For the twelve months ended September 30, 2023, Final Mile generated approximately $289 million in revenue. Final Mile has approximately 45 locations and more than 640 employees that will transfer to Hub Group, Inc.

Tom Schmitt, Chairman, President, and CEO said, “Our Final Mile business grew revenue over 150% since inception in 2019 and returned significant value to Forward’s employees, customers and shareholders. We are pleased the Final Mile team has joined a first-class company and team of people. Corporate clarity remains a top priority as we enter the next phase of our Grow Forward strategy.”

Phil Yeager, President and CEO of Hub Group, stated, “We are excited to welcome the Forward Final Mile team to Hub Group. Through this transaction, we will continue to grow our non-asset logistics segment and deepen our value to our customers through the addition of this excellent team and their best-in-class appliance capabilities.”

Carlton Fields served as legal counsel and Jewell Advisory Group served as M&A advisor to the Company in connection with the transaction.

About Forward Air Corporation

Forward Air is a leading asset-light provider of transportation services across the United States, Canada and Mexico. We provide expedited less-than-truckload services, including local pick-up and delivery, shipment consolidation/deconsolidation, warehousing, and customs brokerage by utilizing a comprehensive national network of terminals. In addition, we offer truckload brokerage services, including dedicated fleet services; and intermodal, first-and last-mile, high-value drayage services, both to and from seaports and railheads, dedicated contract and Container Freight Station warehouse and handling services. We are more than a transportation company. Forward is a single resource for your shipping needs. For more information, visit our website at www.forwardaircorp.com.

This press release may contain statements that might be considered as forward-looking statements or predictions of future operations including with respect to the Company’s expectations regarding its revenue growth strategy. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on management’s belief or interpretation of information currently available. These statements and assumptions involve certain risks and uncertainties including that the Company is not able to execute its Grow Forward Strategy. Actual events may also differ from these expectations as a result of the risks identified from time to time in our filings with the Securities and Exchange Commission. You should consider the forward-looking statement contained herein in light of such risks. We assume no duty to update these statements as of any future date.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231220558190/en/

MEDIA:

Justin Moss - Forward Air

JMoss@forwardair.com

404.362.8933

Source: Forward Air Corporation

FAQ

What is the latest announcement from Forward Air Corporation (NASDAQ: FWRD)?

Forward Air Corporation (NASDAQ: FWRD) has announced the sale of its Final Mile business to Hub Group, Inc. for an estimated total cash consideration of $262 million.

How much revenue did the Final Mile business generate for the twelve months ended September 30, 2023?

The Final Mile business generated approximately $289 million in revenue for the twelve months ended September 30, 2023.

What are the details of the transaction between Forward Air Corporation (NASDAQ: FWRD) and Hub Group, Inc.?

The transaction involves approximately 45 locations and more than 640 employees of the Final Mile business transferring to Hub Group, Inc.

Who served as legal counsel and M&A advisor to Forward Air Corporation (NASDAQ: FWRD) in connection with the transaction?

Carlton Fields served as legal counsel and Jewell Advisory Group served as M&A advisor to Forward Air Corporation (NASDAQ: FWRD) in connection with the transaction.