There’s nothing like a good rumor in the business world.
ArcBest Corp. of Fort Smith filed its proxy statement with the U.S. Securities & Exchange Commission on March 15 and one of the proposals scheduled for a shareholders vote was a change in the voting threshold for matters including the sale or merger of the company. The company’s shareholders meeting is April 26.
The proposal was put forth by the ArcBest board of directors, led by Judy McReynolds, who is also the company’s president and CEO. The change would reduce the votes required from a two-thirds supermajority to a simple majority of 50% plus one. Shareholders would have to approve the change by a supermajority vote.
The voting proposal led to speculation that the long-rumored courtship of ArcBest by transport company TFI International Inc. of Montreal was progressing. Why else call for a new voting standard that would make approval of a sale or merger easier?
TFI, to refresh memories, had acquired about 1 million ArcBest shares — just less than the 4% that would require public disclosure — and TFI CEO Alain Bedard is a bonafide company acquirer. TFI has bought four companies since August, including a $1.1 billion purchase of Daseke that closed April 1.
However, TFI sold its shares of ArcBest not too long after acquiring them, totally divesting itself by the second quarter of fiscal 2023.
TFI reported profits of $504.9 million in fiscal 2023, down from $821.2 million the year before. ArcBest reported profits of $195.4 million in 2023 and $298.2 million in 2022.
Bedard said, during a company earnings call in August, that TFI had too many things on its plate to pursue ArcBest, which he didn’t mention by name. “We’re going to be way too busy, us and them, to go through all these changes in the industry,” Bedard said. “So the timing is wrong. So that’s why we sold our position.”
ArcBest, for its part, consistently responded to any questions about a possible acquisition by saying the voting change was simply a decision to fall in line with the standard operating procedures of most S&P 500 companies. On April 2, ArcBest filed another proxy statement restating the proposal and adding information “to assist our stockholders.”
In the follow-up filing, ArcBest listed four main reasons for the proposed change, including that part about aligning its voting threshold with other S&P companies. The company also said a new majority standard would make the board more accountable to shareholders and would remove the ability of a small group of shareholders to effectively veto a larger voting bloc.
Oh, and the board “also considered that it will continue to uphold its fiduciary responsibility in thoroughly evaluating all potential avenues for stockholder value creation, including potential mergers and major acquisitions.”
So maybe ArcBest will sell at some point. Maybe it won’t. It clearly wants some added flexibility for whatever it decides to do. Or not do.
I am reminded of the story of USA Truck Inc. of Van Buren. It had a roller coaster of a decade before DB Schenker of Essen, Germany, bought it for $435 million in 2022.
USA Truck CEO James Reed oversaw the stabilization of the company, which had some really brutal years before he took over in 2017, and then its sale. Reed said the company wasn’t looking to sell but when DB Schenker reached out in September 2021, listening was the financially responsible thing. “When this opportunity came forward, we thought it prudent to explore it,” Reed told me.
One suspects that ArcBest’s leaders merely want to have the same ability.
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