Spartan Motors, Inc., a provider of specialty chassis and vehicle design, manufacturing, and assembly, announced its wholly-owned subsidiary, Spartan Motors USA, Inc., has entered into a definitive agreement to acquire Smeal Fire Apparatus Co., a 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.

Acquisition Highlights:

• 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.) aerial ladder, platform, and TDA product portfolio 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 positive EBITDA in 2016

• The transaction will be initially financed with Spartan Motors’ recently amended $100 million line of credit.