Freight and logistics company Forward Air Corp. has sold its final mile business to Hub Group Inc. for $262 million, including 46 locations and more than 640 employees.
Forward Air Final Mile (FAFM) provides residential final mile delivery and installation of big & bulky goods, with a focus on appliances. Through a network of independent service providers and its company-operated facilities, FAFM has delivery coverage throughout the continental U.S.
Greeneville, Tennessee-based Forward Air says its Final Mile business grew its revenue over 150% since its inception in 2019, and generated $289 million in revenue for the 12 months ended September 30.
According to Hub Group, buying the unit will enhance end-to-end solutions for Hub’s customers and add significant scale and service capability in appliance delivery and installation. It also drives continued diversification into non-asset based logistics services. In financial terms, the deal increases Hub Group’s last 12 months (LTM) final mile revenue from $192 million to $481 million, Hub Group said.
“FAFM and Hub Group share similar values and goals: striving to be the logistics provider of choice through reliability, integrity, and innovation,” Scott Robider, senior vice president of FAFM, said in a release. “We believe Hub Group’s middle-mile and final-mile expertise, combined with our unique appliance delivery capabilities, will unlock significant value for our combined customers and through this combination we expect to accelerate our growth versus what we have each done individually in the past.”
Investors cheered the move, which will make Hub Group the fourth-largest, North American final mile player in the heavier freight space behind RXO, Pilot, and JBHunt, according to Jason Seidl, an analyst with TD Cowen. In a note to investors, Seidl said he was “encouraged to see [Hub] complete an accretive acquisition in the current freight environment. The new business should bolster resiliency within the segment and offer cross-selling opportunities next year.”
For Forward Air, the deal raises funds and simplifies its legacy asset portfolio, said another analyst, Bascome Majors with Susquehanna International Group, LLP (SIG). However, Forward Air still faces legal uncertainty over a $3.2 billion takeover offer it made in August to buy the logistics service provider (LSP) Omni Logistics but then walked away from. Omni has since sued Forward Air to make it follow through on the deal, and the case is working its way through the courts.
