Published in Manufacturing
Spartan Motors divests fire apparatus business for $55 million COURTESY PHOTO

Spartan Motors divests fire apparatus business for $55 million

BY Wednesday, February 05, 2020 03:46pm

CHARLOTTE — Spartan Motors Inc. has divested its emergency response division to Milwaukee-based REV Group Inc. in a $55 million cash deal, effective Feb. 1. 

The deal allows Spartan Motors (Nasdaq: SPAR) to refocus its business on e-commerce, electrification and autonomous technologies, according to a statement. 

Under the transaction, Spartan Emergency Response and its brands Spartan Fire Apparatus and Chassis, Smeal Fire Apparatus, Ladder Tower, and UST became part of REV’s Fire & Emergency segment. 

The Emergency Response businesses generated $253.3 million in revenue during the 12-month period that ended Sept. 30, 2019. The division makes custom emergency response vehicles, cabs, chassis and complete apparatus for customers in the United States and Canada, and certain markets in South America and Asia.

REV Group (NYSE: REVG) also purchased the rights to the “Spartan” name and logo, which it is licensing back to Spartan Motors for its RV chassis business. 

Spartan plans to change its corporate name “in the coming months, subject to shareholder approval.” The company plans to use proceeds from the divestiture to pay down debt and for working capital. 

“The divestiture of the ER business unit will give us the speed and flexibility needed to further focus on accelerating growth and profitability in our commercial, fleet, delivery, and specialty vehicles markets where we see the biggest opportunity to generate higher returns,” Spartan Motors President and CEO Daryl Adams said in a statement. “By freeing up additional resources and capital to better serve our target markets and make additional strategic investments, we can continue to evolve to meet the needs of our customers and provide long-term value to our shareholders.”

Spartan Motors acquired the Smeal brand in 2016 as part of a $36.3 million deal, as MiBiz reported at the time. Additionally, Spartan Motors expanded its Emergency Response vehicle dealer network in the southeastern United States via a deal last year. 

Through the third quarter of 2019, Spartan Motors generated $194.3 million in sales with the Emergency Response division, and posted an adjusted loss of more than $2.2 million based on lower volume and product mix, supplier and other cost increases, and restructuring and other costs, according to SEC filings. 

The company also ended the third quarter of 2019 with $108.9 million in long-term debt on its balance sheet. 

Spartan Motors indicated in its most recent quarterly filing that it manufactures Emergency Response vehicles at locations in Brandon, S. Dak., Snyder and Neligh, Neb. and Ephrata, Pa., while chassis were made in Charlotte, Mich. 

The company told Crain’s Detroit Business that it did not expect any layoffs as part of the sale.

Throughout 2019, Spartan Motors completed two deals to bolster its other business units. That includes a September deal for Royal Truck Body and the June acquisition of General Truck Body Inc., as MiBiz reported at the time. 

For REV Group, the deal for Spartan Motors’ Emergency Response business positions the company as one of the top fire apparatus manufacturers in North America and offers “significant production scale, diverse product offerings, wide-ranging channel relationships and broad geographic sales coverage,” according to a separate statement. 

“It’s our long-term strategy to continue to grow this segment, as well as continue to establish REV Group as a leader in the innovation of fire apparatus and other emergency response vehicles,” stated REV Group President and CEO Tim Sullivan. 

Read 4545 times
SUBSCRIBE TO MIBIZ TODAY FOR WEST MICHIGAN’S FINEST BUSINESS NEWS REPORTING >