Company to become one of top five last-mile providers, CEO says
Article from FreightWaves, written by Mark Solomon
Expedited transport provider Forward Air Corp. (NASDAQ:FWRD) said late Dec. 12 that it plans to acquire most of Linn Star Holdings, Inc., a last-mile delivery provider that operates mostly in the Midwest and Southwest, for $57.2 million in cash. The transaction excludes Linn Star’s California operations, Forward Air said.
The transaction, which is expected to close next month, is expected to place Forward Air among the top five U.S. last-mile providers, according to Tom Schmitt, Forward Air’s chairman, president and CEO. Forward’s Air’s final-mile network operates in 83 markets, of which 75 were added just in the past 12 months.
In March, Forward Air acquired final-mile provider FSA Logistix for $27 million. There will be little duplication between Linn Star’s network and Forward Air’s existing final-mile operation, Schmitt said.
Cedar Rapids, Iowa-based Linn Star is expected to bring Forward Air $90 million in annualized revenue and $8.3 million in earnings before interest, taxes, depreciation and amortization (EBITDA), Forward Air said. Linn Star will be assigned to the final-mile division of Forward Air’s Expedited less-than-Truckload (LTL) segment.
Linn Star specializes in so-called white-glove delivery, which typically includes in-home installation services and the hauling away of the old item, if one exists. In the slice-and-dice world of residential final-mile delivery pricing, where rates vary depending on whether the product is left on a doorstep or brought directly into the room of choice, in-home installation usually commands a premium price.
Forward Air did not comment on why Linn Star’s California operations were excluded from the transaction. Benjamin J. Hartford, transport analyst for investment firm Baird, said Forward Air wants to limit its exposure to the state in the wake of landmark legislation, known as AB 5, that makes it harder for trucking firms to prove that drivers in California who work for them are owner-operators and not company employees.
Forward Air executives said in early 2019 that the company would be acquisitive in areas where it previously wasn’t a major presence. The final-mile division was launched four years ago. Schmitt said the company is “not done yet” in building out its final-mile capabilities.
Forward Air specializes in fast-cycle, time-definite deliveries that are a less expensive alternative to air transport. It operates an airport-to-airport business, in which it moves goods between 90 terminals located at or around U.S. airports, and a smaller door-to-door operation.