Addition of Smeal Product Portfolio and Key Operational Team Members Accelerates Spartan Motors’ Emergency Response Business Turnaround Plan; Transaction Accretive to Earnings in 2017
CHARLOTTE, Mich., December 13, 2016 – Spartan Motors, Inc. (NASDAQ: SPAR) (“Spartan” or the “Company”), a global leader in specialty chassis and vehicle design, manufacturing, and assembly, today announced its wholly-owned subsidiary, Spartan Motors USA, Inc., has entered into a defnitve agreement to acquire Smeal Fire Apparatus Co. (“Smeal”), an industry-leading innovator and manufacturer of fre apparatus
in North America, and its subsidiaries for $36.3 million, subject to certain net working capital adjustments, the Company’s forgiveness of certain liabilites owed by Smeal to the Company, and a subsequent tax gross-up payment, which is expected to be more than ofset by tax benefts accruing to the Company. The acquisiton will enable Spartan Motors to strengthen its Emergency Response business, gain scale and geographic reach
in the industry, and accelerate its Emergency Response business unit turnaround plan. The transacton is expected to close in January 2017, subject to customary closing conditions.
Smeal is expected to generate 2016 revenues of approximately $100 million, which includes approximately $30 million of Spartan chassis sold to Smeal. The newly combined Spartan Emergency Response business unit will rank as one of the top-four North American fre apparatus manufacturers and will be well positoned, in an increasingly consolidatng industry, to provide a robust and respected portolio of leading products, services, and technologies. Today, Spartan’s Emergency Response business unit engineers and builds fre truck cabs and chassis for many of the industry’s leading original equipment manufacturers (OEMs), including Smeal, as well as designs and manufactures complete fre apparatus. The acquisiton of Smeal is a logical next step in the longstanding relatonship between the two companies, which spans more than 30 years.
“We look forward to adding Smeal’s industry-leading product portolio and manufacturing expertse to Spartan’s, while expanding on a decades-long successful partnership,” said Daryl Adams, President and Chief Executive Offcer of Spartan Motors. “We expect the acquisition to be accretve to earnings in 2017 and bring significant scale to our Emergency Response vehicle portfolio, which will help accelerate the turnaround of the Spartan Emergency Response business unit. It also expands the geographic reach of our dealers, benefits all of our customers by expanding our product offerings, and brings an additional portolio of leading technology and expertise to the market.” Adams continued, “We are pleased that Smeal chose Spartan Motors as their partner to carry on their brand’s legacy, as we take our supplier relationship to the next level. Spartan Motors is prepared to lead the consolidation charge in the fre apparatus market as strategic opportunities present themselves, and this acquisition represents a deliberate and strategic decision to accelerate the turnaround of Spartan’s Emergency Response business unit. Importantly, we also preserve a large, longstanding chassis customer
relationship and protect the interests of their dealer channel, as we expand our dealer network across the U.S. and Canada and simultaneously accelerate our goal of becoming the leader in the fre apparatus market.”
Founded in 1955, Snyder, Neb.-based Smeal and its subsidiaries, U.S. Tanker Co. and Ladder Tower Co., are leaders and innovators in fre truck manufacturing and vehicle technology, offering a full line of aerial ladders and platforms (including Squrt®, TeleSqurt®, and Snorkel®), tractor-drawn aerials (TDAs), pumpers, stainless steel tankers and wildland urban interface vehicles (WUI). Today, Smeal operates facilities located in Snyder and Neligh, Neb.; Delavan, Wis.; and Ephrata, Penn.
“Spartan Motors is the perfect ft for Smeal, our customers, our employees, and our operatonal leadership team, as we combine with a proven ally and industry leader to help solidify our future and preserve the legacy of the Smeal organization,” said Rod Cerny, Smeal’s Chairman of the Board. “As part of a larger, profitable and well-capitalized public company, we will have the working capital necessary to ensure continued investment in product development and make sure the Smeal brand is able to deliver the exceptional products and service our dealers, departments, and municipality customers have come to expect.”
- The acquisition is a positive and compelling strategic fit for both companies and is an important step in securing the Company’s market leadership in an increasingly consolidating industry
- The acquisition is expected to be accretive to earnings for Spartan Motors in 2017 through a combination of operating efficiency efforts and synergies
- Smeal’s (including U.S. Tanker Co. and Ladder Tower Co.) notably superior aerial ladder, platform, and TDA product portolio enhances and complements Spartan’s and brings industry-leading product technology to an important, high-performance product subset
- The combined Company will have 47 dealers in 44 states, 10 provinces and 3 territories, giving Spartan Emergency Response the ability to serve customers in the entire U.S. and all of Canada
- Smeal is expected to add approximately $70 million in annual revenue (excludes $30 million of Spartan chassis sold to Smeal) to the Company’s Emergency Response segment, and positions Spartan Emergency Response as one of the top-four fire apparatus manufacturers in the U.S. and Canada
- Smeal is expected to generate positve EBITDA in 2016
- The transaction will be initially financed with Spartan Motors’ recently amended $100 million line of credit
“We are proud of this signifcant milestone for Spartan’s Emergency Response business, and welcome Smeal’s knowledgeable and respected operational management team and employees to the Spartan Motors family,” concluded Daryl Adams. “This transaction will bring together some of the best talent in the industry and provides an opportunity for all employees to pursue a broader and more diverse career path.”
For more information regarding this transaction, please visit www.spartanmotors.com/smeal.