GREENEVILLE, Tenn. (WJHL) — Forward Air founder Scott Niswonger says he’s “lost a lot of sleep” over the local impact of a proposed merger that’s currently held up in court.
Niswonger told News Channel 11 the August 10 announcement that Forward Air would buy Omni Logistics — something transportation industry trade publications and analysts almost immediately panned — was a bad idea that could ultimately kill a major local employer.
“There are 280 or so jobs, the back office, the accounting, the customer service functions that are here,” Niswonger said. “The company needs to be successful for those jobs to survive here, and in a small town like Greeneville those type of corporate jobs, they aren’t that plentiful.”
The decision by Forward Air CEO Thomas Schmitt came with a condition that particularly rankled Niswonger, who quit the Forward Air board over it. The move, which would involve Forward Air taking on $1.9 billion of Omni’s debt and giving its current owners 37% of the new company, wasn’t subject to a shareholder vote.
“I thought it was way, way too expensive for what they were buying, not to mention they were … going to buy a company that competes without our customer base,” Niswonger said.
“When I heard there was a workaround that would allow the current shareholders not to be able to vote, that’s when I decided that I couldn’t remain with the company.”
Niswonger also supported a legal effort to get a temporary restraining order delaying the merger. That effort lost in a Greene County court case but is on appeal. In the meantime, Schmitt has changed his tune after telling News Channel 11 after an Oct. 11 hearing the merger would result in “profitable growth.”
Two weeks later, Forward Air reversed course and said it might terminate the proposed acquisition, alleging that Omni hadn’t complied with some of its obligations in the agreement. Omni sued to force the merger Oct. 31, and Forward countersued Friday.
“Forward Air has now gained wisdom about this merger through talking to lots of people that have reacted violently and negatively about this and so Forward Air’s fighting to stop the deal,” Niswonger said. “I’m very encouraged by that.”
He said he hopes Forward Air’s leadership is allowed to back out of the deal. Forward Air’s stock dropped 40% to its lowest level in nearly three years after the deal was announced.
Niswonger founded Forward Air in 1990. The company moved freight, usually less than full truckloads, from airport to airport overnight for about a third of the cost of freighter aircraft. The concept worked well enough that last year, Forward Air had a net income of nearly $200 million on revenues of $2 billion. It has more than 900 trucks and 6,500 trailers — and it remains headquartered in Greeneville.
“It is a wonderful company,” Niswonger said. “The investment over the years that Forward Air and Land Air have made with the (Niswonger) Foundation, the investments we’ve been able to put back into this community are really important and a little bit unique for corporations to care that much about the community in which they were founded and operate.”
So far, Omni is pushing to force the deal. The shareholders who filed for a restraining order have appealed its denial, but currently the deal could go through unimpeded. At this point, though, a judge would have to rule against Forward Air’s change of heart.
“The market doesn’t like the deal,” Niswonger said. “The shareholders don’t like the deal. I don’t like the deal, and now the company doesn’t like the deal, so hopefully they can escape.”