Forward Air to Buy Towne for $125 Million, Combining Largest Air-Ground Carriers

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This story appears in the Feb. 16 print edition of Transport Topics.

Forward Air Corp. has agreed to acquire Towne Air Freight for $125 million in a move that combines two of the largest companies specializing in transporting cargo to and from airports in the United States.

The deal, which is expected to close in the first quarter, reflects a trend of consolidation in the trucking industry as companies look to acquire rivals to boost profits and meet increasing demand.

“We are extremely pleased with this acquisition,” Forward Air Chairman Bruce Campbell said in a statement. “Those familiar with Forward Air and Towne have long thought that this deal was inevitable, simply due to the substantial synergies that clearly exist.”

Forward Air and Towne Air Freight provide ground transport for airlines and freight forwarders, along with expedited truckload, less-than-truckload, warehousing and intermodal drayage services.

Forward Air is headquartered in Greeneville, Tennessee, and ranks No. 46 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada. Towne Air, based in South Bend, Indiana, ranks No. 86.

Campbell said he expects the purchase to add at least $140 million in revenue this year and boost profits by 26%. Forward Air earned $61.2 million, or $1.96 a share, on revenue of $781 million in 2014.

By combining the freight volumes of the two companies, Forward Air will be able to move goods more efficiently through its network of 88 terminals, Campbell said.

“Our plan is to take a methodical approach to evaluate, then integrate, as much of the Towne book of business as we possibly can,” he said.

Campbell said the potential addition of Towne Air’s 525 owner-operators and team drivers also will reduce the need to use higher-cost outside carriers and will ease pressure on Forward Air to recruit additional owner-operators.

Eugene Towne started Towne Air Freight in 1963 to provide local pickup-and-delivery and linehaul services between South Bend and Chicago’s O’Hare airport.

Gary Downey purchased the business in 1982 and expanded nationwide, making several acquisitions along the way. He also started two affiliated businesses: Rocket Expedited Services to provide expedited transportation service and Towne Network Solutions to provide logistics and managed transportation services.

The company currently is owned by Centre Lane Partners, a New York-based investment firm.

Towne Air Freight had revenue of about $230 million in 2014, compared with $265 million reported in 2013, and is considered to be operating on a break-even basis, Campbell said.

Forward Air, besides providing ground transportation for air cargo shippers and freight forwarders, operates a pool distribution business called Forward Air Solutions and Total Quality Inc., a specialized freight service for pharmaceutical shippers. The company also operates an intermodal drayage business under the name Central State Trucking.

Campbell said the company is prepared to accelerate the growth of Central State’s business when the Towne Air acquisition is completed.

“While I firmly believe that our acquisition of Towne will undoubtedly prove to be one of the best deals in our history, the due diligence has been costly as well as a distraction to our management team,” Campbell said. “With that distraction substantially behind us, we can focus on integration, control and most importantly providing superior service to our customers and superior returns to our shareholders.”