Forward files counterclaim against Omni, seeks path out of merger
Forward Air said Monday it responded under seal to Omni Logistics’ lawsuit calling on a Delaware court to make it carry through with a planned merger between the two companies. Forward also said it filed a counterclaim against Omni and has asked the court to rule that it is not required to close on the deal as it alleges Omni has failed to meet certain pre-closing conditions.
“Forward believes that Omni has not complied with certain of its obligations under Sections 7.03 and 7.14 of the Merger Agreement,” a news release said. “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.”
A public version of the filings is expected to be provided by Friday the news release said.
At the end of October, Forward (NASDAQ: FWRD) said it may not carry through with the merger as Omni hadn’t provided it with timely access to information and failed to meet other pre-closing conditions. The comments followed the dissolution of a temporary restraining order blocking the deal, which was issued by a Tennessee court on behalf of a group of shareholders that claimed they would be harmed if the transaction proceeded.
Omni’s lawsuit was filed at the end of October. It claims Forward now has cold feet following pushback from shareholders, which were upset they weren’t given the opportunity to vote on the deal. Shareholders have publicly criticized the $3.2 billion price tag and the amount of debt leverage Forward will incur to fund the transaction, among other things.
Since the deal was announced on Aug. 10, shares of FWRD are off more than 40%.
Omni’s claim said Forward made “repeated overtures” to “renegotiate the deal in its favor or cancel it altogether” following backlash from investors. Omni also said that Forward’s claim it had breached the deal agreement was a misrepresentation of an exchange of information between the two parties.
Omni said it provided Forward with fourth-quarter projections as requested, but that it sought advise as to how to divide the expected deal synergies the business combination would produce. It said Forward didn’t provide any assistance and that it is now representing Omni’s “what if” scenario against it, claiming the estimates are “substantially lower than what Omni had reaffirmed at due diligence meetings.”
Omni said it has complied with all obligations required under the merger agreement and has asked the court for a trial date on the matter before the agreement expires on Feb. 10.
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