Spartan Motors Announces Agreement to Acquire Utilimaster Corporation
November 19 2009 - 8:45AM
PR Newswire (US)
CHARLOTTE, Mich., Nov. 19 /PRNewswire-FirstCall/ -- Spartan Motors,
Inc. (NASDAQ:SPAR) today announced it has reached an agreement to
acquire Utilimaster Corporation from John Hancock Life Insurance
Company, a unit of Manulife Financial Corporation, a leading
Canadian-based financial services group, in an all-cash transaction
valued at approximately $45 million. Utilimaster is a dominant
manufacturer of 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. Spartan said the acquisition
of Utilimaster is expected to add approximately $105 million in
annualized revenues and be slightly dilutive to earnings in the
first full year and accretive by year two. Utilimaster has
approximately 550 employees and more than 550,000 sq. ft. of
manufacturing capacity at its corporate headquarters in Wakarusa,
Indiana. "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," said John Sztykiel, president and
CEO of Spartan Motors. "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." 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. Spartan's Chief Financial Officer Joe
Nowicki commented: "This transaction creates the opportunity to
leverage our strong balance sheet, while providing opportunities
for growth in a business that is very scalable but not capital
intensive, much like our current market. We also expect to see
immediate operational and financial synergies, including achieving
purchasing leverage in raw materials and driving joint R&D and
product development efforts. "We as a Spartan leadership team set
out with a purposeful process and criteria in evaluating both
organic market entries and acquisitions to diversify our business
risk and growth potential. Utilimaster hit our targets for cultural
fit, market potential and financial metrics, including sustained
profitability and market share gains amidst an industry that has
declined by 50 percent due to macro-economic conditions." Under the
terms of the purchase agreement, Spartan will pay $50 million in
cash, less a net working capital adjustment. In addition, Spartan
has agreed to pay contingent earn-out payments of up to $7 million
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. Spartan had approximately $48 million in cash and cash
equivalents and an additional $50 million in availability under its
line of credit as of October 30, 2009. "We are pleased to join
forces with the Spartan Motors team," said Mike Kitson, Utilimaster
president and CEO. "Spartan and Utilimaster share a similar
business model, complementary team culture and financial discipline
- focused on return on invested capital - that bode well for our
continued momentum in the marketplace. Based on the excellent
strategic fit, I am convinced our organizations will be stronger
together as we seek to leverage operational best practices and
attack new growth markets beyond those we could penetrate
individually." Conference Call, Webcast Spartan Motors will host a
conference call for analysts and portfolio managers at 1 p.m. ET
today, Nov. 19, 2009, to discuss the acquisition. To listen to a
live webcast of the call, please visit
http://www.spartanmotors.com/, click on "Shareholders," and then on
"Webcasts." About Utilimaster Established in 1973, Utilimaster
(http://www.utilimaster.com/) is a leading manufacturer of walk-in
vans and commercial truck bodies for the delivery and service
market place. As one of the most respected and trusted
manufacturers of commercial vehicles, Utilimaster designs, develops
and manufactures products to customer specifications for use in the
package delivery, one-way truck rental, bakery/snack delivery,
utility and linen/uniform rental businesses. The company serves a
diverse customer base and also sells aftermarket parts and
accessories. About Spartan Motors Spartan Motors, Inc.
(http://www.spartanmotors.com/) designs, engineers and manufactures
specialty chassis and vehicles for the recreational vehicle, fire
truck, ambulance, emergency-rescue and defense/specialty markets.
The company's brand names - Spartan(TM), Crimson Fire(TM), Crimson
Fire Aerials(TM), and Road Rescue(TM) - are known for quality,
value, service and being the first to market with innovative
products. The company employs approximately 1,000 at facilities in
Michigan, Pennsylvania, South Carolina, South Dakota and Texas.
Spartan reported sales of $844.4 million in 2008 and is focused on
becoming a global leader in the manufacture of specialty vehicles
and chassis. This release contains forward-looking statements,
including, without limitation, statements concerning our business,
future plans and objectives and the performance of our products.
Forward-looking statements are identifiable by words such as
"believe," "anticipate," "will," "sustain," and "continue." These
forward-looking statements involve certain risks and uncertainties
that ultimately may not prove to be accurate. For example, we may
encounter unforeseen difficulties and challenges in entering new
markets or in pursuing strategic acquisitions. In addition,
technical and other complications may arise that could prevent the
timely implementation of our plans or that may impact the expected
outcome of those plans. As a result, actual results and future
events could differ materially from those anticipated in such
statements. The company cautions that these forward-looking
statements are further qualified by other factors including, but
not limited to, those set forth in the company's Annual Report on
Form 10-K filing and other filings with the United States
Securities and Exchange Commission (available at
http://www.sec.gov/). Government contracts and subcontracts
typically involve long payment and purchase cycles, competitive
bidding, qualification requirements, delays or changes in funding,
extensive specification development and changes, price negotiations
and milestone requirements. An announced award of a governmental
contract is not equivalent to a finalized executed contract and
does not assure that orders will be issued and filled. Government
agencies also often retain some portion of fees payable upon
completion of a project and collection of contract fees may be
delayed for long periods, which can negatively impact both prime
contractors and subcontractors. The company undertakes no
obligation to publicly update or revise any statements in this
release, whether as a result of new information, future events or
otherwise, except as required by law. DATASOURCE: Spartan Motors,
Inc. CONTACT: John Sztykiel, CEO, or Joe Nowicki, CFO, both of
Spartan Motors, Inc., +1-517-543-6400; Jeff Lambert or Jeff Tryka,
, both of Lambert, Edwards & Associates, +1-616-233-0500 Web
Site: http://www.spartanmotors.com/
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