Spartan Motors Enters Agreement To Acquire Utilimaster
Published:19-November-2009
By Staff Reporter
In an all-cash transaction valued at approximately $45m
Spartan Motors has signed an agreement to acquire Utilimaster Corporation from John Hancock Life Insurance Company, a unit of Manulife Financial Corporation, in an all-cash transaction valued at approximately $45m.
Utilimaster manufactures specialty vehicles made to customer specifications in the delivery and service market, including walk-in vans and hi-cube vans, as well as truck bodies. Utilimaster has approximately 550 employees and more than 550,000 square feet of manufacturing capacity at its corporate headquarters in Wakarusa, Indiana.
The company said that the acquisition of Utilimaster is expected to add approximately $105m in annualized revenues. The majority of Utilimaster's revenues are in the delivery and service market, which includes walk-in vans for the package delivery, bakery/snack delivery and linen/uniform rental markets. Its remaining revenues are attributable to commercial truck bodies, along with service, parts and accessories.
John Sztykiel, president and chief executive officer of Spartan Motors, said: "This acquisition represents a major strategic step forward to diversify our revenue stream into new end markets that offer growth potential and are not directly dependent on government funding or consumer spending. The two companies share similar cultures, a focus on premium products and innovation, and management depth that make this an ideal fit. We also gain entry into the North American delivery and service market, add fabrication and vehicle body expertise, benefit from Utilimaster's strong brand, market share position and blue-chip customer base, and create opportunities to leverage future Spartan chassis growth."
Under the terms of the purchase agreement, Spartan will pay $50m in cash, less a net working capital adjustment. In addition, Spartan has agreed to pay contingent earn-out payments of up to $7m based primarily on the Utilimaster operation exceeding revenue milestones. The acquisition will be financed with a combination of cash and debt with an expected closing date for the transaction of November 30, 2009, subject to the fulfillment of customary closing conditions.
