Annual report [Section 13 and 15(d), not S-K Item 405]

Acquisitions

v3.25.1
Acquisitions
 12 Months Ended
Dec. 31, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Acquisitions Acquisitions
Acquisition of Omni

On January 25, 2024, (the “Closing”) the Company completed the acquisition of Omni Newco, LLC (the "Omni Acquisition") pursuant to the Agreement and Plan of Merger, dated as of August 10, 2023 (the “Merger Agreement”, and amended by Amendment No. 1, dated as of January 22, 2024, the “Amended Merger Agreement”). Omni, headquartered in Dallas, Texas, is an asset-light, high-touch logistics and supply chain management company with customer relationships in high-growth end markets. Omni delivers domestic and international freight forwarding, fulfillment services, customs brokerage, distribution, and value-added services for time-sensitive freight to U.S.-based customers operating both domestically and internationally. Pursuant to the Amended Merger Agreement, through a series of transactions involving the Company’s direct and indirect subsidiaries (collectively, with the other transactions contemplated by the Amended Merger Agreement and the other Transaction Agreements referred to therein, the “Transactions”), acquired Omni for a combination of (a) $100,499 in cash (which includes pre-acquisition Omni costs of approximately $80 million) and (b) 14,015 shares of the Company’s outstanding common stock, on an as-converted and as-exchanged basis (the “Equity Consideration”) consisting of: (i) 1,910 shares of common stock (of which 1,210 were issued upon conversion of the Series C Preferred Units upon approval of the Company’s shareholders at the 2024 Annual Shareholders Meeting held on June 3, 2024 (the “Conversion Approval”)) and (ii) 12,105 Opco Class B Units (as defined below) and corresponding Series B Preferred Units (as defined below), which are exchangeable into shares of Common Stock (of which 7,670 units were issued upon conversion of the units of Opco (defined below) designated as “Opco Series C-2 Preferred Units” upon the Conversion Approval. The Equity Consideration represents, as of December 31, 2024, 34% of the Company’s outstanding common stock on a fully-diluted and as-exchanged basis. Please refer to sections hereinafter in relation to Series B, Series C, and Series C-2.

Prior to the consummation of the Transactions, the Company completed a restructuring, pursuant to which, among other things, the Company contributed all of its operating assets to Clue Opco LLC, a newly formed subsidiary of the Company (“Opco”). Opco has been structured as an umbrella partnership C corporation through which the existing direct and certain indirect equity holders of Omni (“Omni Holders”) hold a portion of the Equity Consideration in the form of units of Opco designated as “Class B Units” (“Opco Class B Units”) and corresponding Series B Preferred Units. Effective as of the Closing, the Company operates its business through Opco, which indirectly holds all of the assets and operations of the Company and Omni. Opco is governed by an amended and restated limited liability company agreement of Opco that became effective at the Closing (“Opco LLCA”).

At the Closing, the Company, Opco, Omni Holders and certain other parties entered into a tax receivable agreement (the “Tax Receivable Agreement”), which sets forth the agreement among the parties regarding the sharing of certain tax benefits realized by the Company as a result of the Transactions. Pursuant to the Tax Receivable Agreement, the Company is generally obligated to pay certain Omni Holders 83.5% of (a) the total tax benefit that the Company realizes as a result of increases in tax basis in Opco’s assets resulting from certain actual or deemed distributions and the future exchange of units of Opco for shares of securities of the Company (or cash) pursuant to the Opco LLCA, (b) certain pre-existing tax attributes of certain Omni Holders that are corporate entities for tax purposes, (c) the tax benefits that the Company realizes from certain tax allocations that correspond to items of income or gain required to be recognized by certain Omni Holders, and (d) other tax benefits attributable to payments under the Tax Receivable Agreement.

The Omni Acquisition enables the Company to provide a differentiated service offering and expanded geographic footprint to customers. In addition, the combination of these complementary businesses positions the Company to deliver integrated global supply chain solutions for customers’ most service-sensitive logistics needs. Goodwill recognized related to the purchase represents planned operational synergies, expanded geographic reach of our services, and strategic market positioning. The results of Omni have been included in the Consolidated Financial Statements as of and from the date of acquisition. The associated goodwill has been included in the Omni reportable segment and is not expected to be deductible for tax purposes.

Details of consideration paid are included in the Purchase Price Allocation table within this footnote. Details of debt related items for the transaction are included in the debt footnote.
Series B Preferred Stock

Pursuant to Articles of Amendment to the Restated Charter of the Company filed with the Secretary of State of the State of Tennessee at the Closing (the “Charter Amendment”), the Company established the terms of a new series of preferred stock of the Company designated as “Series B Preferred Stock” (the “Series B Preferred Stock”), and, at the Closing, certain Omni Holders received fractional units (the “Series B Preferred Units”) each representing one one-thousandth of a share of the Company Series B Preferred Stock. Each Series B Preferred Unit will, together with a corresponding Opco Class B Unit, be exchangeable at the option of the holder thereof into one share of the Company’s common stock.

Series C Preferred Stock

Pursuant to the Charter Amendment, the Company established the terms of a new series of convertible preferred stock of the Company designated as “Series C Preferred Stock” (the “Series C Preferred Stock”), and, at Closing, certain Omni Holders received fractional units (each, a “Series C Preferred Unit”) each representing one one-thousandth of a share of Series C Preferred Stock. The liquidation preference of Series C Preferred Unit is equal to $110.00 per unit, subject to adjustment for any in-kind payment of the Annual Coupon as described below (the “Liquidation Preference”). In addition, the Series C Preferred Units accrue on each anniversary of issuance a cumulative annual dividend (without any interim accrual) equal to the product of (a) a rate to be fixed at Closing (which equals the rate per annum equal to a spread of 3.50% above the yield payable on the most junior tranche of debt issued in connection with the Transactions, rounded to the nearest 0.25%) multiplied by (b) the Liquidation Preference (the “Annual Coupon”). The Annual Coupon will be paid, at the Company’s option, in cash or in-kind by automatically increasing the Liquidation Preference in an equal amount. Series C-2 units carried consistent economic terms as Series C. All shares were converted in June of 2024.

Due Diligence, Transaction and Integration Costs

For the year ended December 31, 2024 and 2023, the Company recorded $81,467 and $57,490, respectively, of due diligence, transaction and integration costs incurred in connection with the acquisition of Omni. These costs were recorded in “Other operating expenses” in the Consolidated Statements of Comprehensive Income.
Business Combination Accounting - Omni Logistics

We accounted for the Omni purchase using the acquisition method of accounting under U.S. generally accepted accounting Assets acquired and liabilities assumed as of the acquisition date are presented in the following table:
January 26, 2024 Opening Balance Sheet as Reported at March 31, 2024
Adjustments
 January 26, 2024 Opening Balance Sheet as Reported at December 31, 2024
Consideration Transferred
Cash consideration paid $ 100,499  $ —  $ 100,499 
Liabilities under tax receivable agreement 13,270  —  13,270 
Common shares 32,795  (1,967) 30,828 
Series B preferred shares 207,880  (12,473) 195,407 
Series C preferred shares 56,713  (3,403) 53,310 
Opco C-2 preferred units 359,493  (21,570) 337,923 
Extinguishment of Omni's indebtedness 1,543,003  —  1,543,003 
Total purchase price (fair value of consideration) 2,313,653  (39,413) 2,274,240 
Fair Value of Assets Acquired and Liabilities Assumed
Cash and cash equivalents acquired 78,260  (10,977) 67,283 
Accounts receivable 181,570  10,441  192,011 
Property and equipment 75,292  14,082  89,374 
Other assets 35,639  (3,084) 32,555 
Operating lease right-of-use assets 234,025  13,665  247,690 
Customer relationships 1,062,729  (158,929) 903,800 
Non-compete agreements 42,509  (19,109) 23,400 
Trademarks and other 42,510  (19,410) 23,100 
Total assets acquired 1,752,534  (173,321) 1,579,213 
Current liabilities 156,408  (368) 156,040 
Finance lease obligations 14,606  2,977  17,583 
Operating lease liabilities 234,025  13,844  247,869 
Other liabilities 643  (559) 84 
Deferred income taxes 133,673  22,127  155,800 
Total liabilities assumed 539,355  38,021  577,376 
Goodwill $ 1,100,474  $ 171,929  $ 1,272,403 


The estimated useful life of Omni acquired intangible assets as of the acquisition date are summarized in the following table:
Years
Customer relationships 14 years
Non-compete agreements 4 years
Trademarks and other
 5 years
Supplemental Pro Forma Information

    The following table represents the pro forma financial information as if Omni had been included in the consolidated results of the Company since January 1, 2023 (unaudited and in thousands):
  Year Ended
  December 31,
2024		 December 31,
2023
Pro forma revenue
 $ 2,556,262  $ 2,659,431 
Pro forma net loss from continuing operations
 (1,190,392) (159,425)

The pro forma financial information adjusts the net loss for amortization of the intangible assets and the fair value adjustments of the assets acquired in connection with the Omni Acquisition as if the Closing had occurred on January 1, 2023. The one year acquisition measurement period closed on the anniversary of the transaction.

Acquisition of Land Air Express

In January 2023, the Company acquired certain assets of Land Air Express, Inc. (“Land Air”) for $56,567. Land Air, headquartered in Bowling Green, Kentucky, offers a variety of less-than-truckload services including guaranteed, standard, exclusive, same day, hot shot and pickup and delivery, and operates in over 25 terminals across the United States. The acquisition of Land Air is expected to accelerate the expansion of the Company’s national terminal footprint, particularly in the middle part of the United States, and strategically position the Company to better meet the current and future needs of customers. The acquisition was funded using cash flow from operations and proceeds from the Company’s credit facility. The results of Land Air have been included in the Company’s Consolidated Financial Statements as of and from the date of acquisition. The associated goodwill has been included in the Company’s Expedited Freight reportable segment.
Land Air
January 31, 2023
Tangible assets:
Property and equipment $ 738 
Total tangible assets 738 
Intangible assets:
Customer relationships 1
35,200 
Goodwill 20,629 
Total intangible assets 55,829 
Total assets acquired 56,567 
Net assets acquired 2
$ 56,567 
1 Estimated useful life of 15 years
2 No liabilities were assumed in relation to the Land Air transaction.