By Svea Herbst-Bayliss
NEW YORK, Aug 20 (Reuters) - Activist investor Ancora Holdings is urging Forward Air FWRD.O to launch a strategic review and consider a sale, and it warned that a board challenge might follow if investors' calls for action are ignored.
Ancora, which owns a 4% stake in the freight forwarding company, said in a letter to the board, seen by Reuters, that improving operations, fixing the balance sheet and serving customers would be better achieved as a private company.
Facing the prospects of a softer freight market, a large debt load from a recent acquisition, and a possible economic recession, "We believe the Board must evaluate any and all alternatives that exist today," Ancora wrote. Its letter echoed other large shareholders' calls for change.
The company did respond to a request for comment.
Since January, the company has lost roughly half of its value, Ancora , adding however that its underperformance has been persistent. Over the last five years, the stock price has fallen 46.5%. The stock closed at $31.07 on Monday.
In January, Forward Air completed its $3.2 billion purchase of Omni Logistics, a move many shareholders criticized. In February, CEO Tom Schmitt left. In April, Shawn Stewart was CEO.
For the company and its shareholders, it would make more sense to "announce a real review of sale options and the retention of truly independent legal and financial advisors," Ancora said.
"Running a robust process will likely spur productive -term discussions with interested parties, including the many financial sponsors with holdings and expertise in the sector," the letter said.
Investors who own roughly more than one-fifth of Forward Air's outstanding shares have already thrown their weight behind starting a strategic review, the letter said.
Last week, Clearlake Capital Group, Forward Air's second-largest owner with a 13.8% stake, said in a regulatory filing that it may engage with management, the board and others to discuss strategic alternatives.
Earlier this year, activist investor Irenic Capital Management, which owned a 3.9% stake in Forward Air at the end of June, called for a strategic review in a private letter to the company, sources familiar with the matter said.
Should management and the board drag their heels on starting a process, Ancora hinted that a proxy fight to replace board members could follow.
"In the event such overwhelming consensus is ignored, we expect there will be a formidable campaign to replace several members of the Board – particularly those who pushed through this year’s disastrous acquisition – at the 2025 Annual Meeting of Shareholders," the letter said.
The company is worth roughly $860 million and has 12 directors. It held its most recent annual meeting in June.
Ancora first invested in Forward Air in 2020 and reached a settlement with the company a year later that added two directors to the board. It began building its current stake during the second quarter, according to a regulatory filing.
Previously, Ancora pushed for changes at freight broker C.H. Robinson CHRW.O, where it placed two people on the board and helped push out a former CEO. At railroad Norfolk Southern NSC.N, it won three board seats in a bitter board room battle this year.
(Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker)
((svea.herbst@thomsonreuters.com; +617 233 2138; Reuters Messaging: svea.herbst.thomsonreuters.com@reuters./))