Forward Air’s final mile business grew revenue over 150% since its inception in 2019.
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Hub Group Inc. has expanded its final-mile delivery business with the acquisition of Forward Air Final Mile from Forward Air Corp. The combined businesses will operate under the Hub Group Final Mile brand.
FAFM provides residential final-mile delivery and installation of big and bulky goods, with a focus on appliances, often called “white glove” services. Through a network of independent service providers and 46 company-operated facilities, Forward Air Final Mile has delivery coverage throughout the continental U.S.
The deal adds significant appliance delivery and installation capability to Hub Group’s Final Mile offering, enabling growth through cross-selling to Hub Group’s customer base.
Bruce Chan at Stifel, in an email news alert to investors, said the deal should give Hub Group 3% or more of the $15 billion heavy goods white glove final-mile market.
“This is not a great time for heavy goods final mile — it’s not a great time for freight in general — but consumer durables are likely in a supercycle trough,” Chan said, “with most consumers blowing the wad on appliances and big and bulky during and immediately following the pandemic.
“Hub has more middle-mile capabilities to sell through to FAFM customers, which should open better cross-selling opportunities.”
The acquisition is the largest non-asset transaction in Hub Group’s history. Cash consideration for the transaction of $262 million was funded with cash on hand.
“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,” said Scott Robider, FAFM SVP. “Through this combination we expect to accelerate our growth versus what we have each done individually in the past.”
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