CHARLOTTE, MI—Spartan Motors, Inc. ("Spartan" or the "Company"), has announced its wholly-owned subsidiary, Spartan Motors USA, Inc., has entered into a definitive agreement to acquire Smeal Fire Apparatus Co., an innovator and manufacturer of fire apparatus in North America, and its subsidiaries for $36.3 million, subject to certain net working capital adjustments, the Company's forgiveness of certain liabilities owed by Smeal to the Company, and a subsequent tax gross-up payment, which is expected to be more than offset by tax benefits accruing to the Company. The acquisition 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 transaction 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 fire apparatus manufacturers and will be well positioned, in an increasingly consolidating industry, to provide a robust and respected portfolio of leading products, services, and technologies. Today, Spartan's Emergency Response business unit engineers and builds fire truck cabs and chassis for many of the industry's leading original equipment manufacturers (OEMs), including Smeal, as well as designs and manufactures complete fire apparatus. The acquisition of Smeal is a logical next step in the longstanding relationship between the two companies, which spans more than 30 years.
"We look forward to adding Smeal's industry-leading product portfolio and manufacturing expertise to Spartan's, while expanding on a decades-long successful partnership," said Daryl Adams, president and CEO of Spartan Motors. "We expect the acquisition to be accretive 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 portfolio 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 fire 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 fire apparatus market."
Founded in 1955, Snyder, Nebraska-based Smeal and its subsidiaries, U.S. Tanker Co. and Ladder Tower Co., are leaders and innovators in fire truck manufacturing and vehicle technology, offering a full line of aerial ladders and platfo