#USA #Shyft Group #Specialty Vehicles #Aebi Schmidt Group #Novi, Michigan

Major Merger in the Specialty Vehicle Market

In a significant move set to reshape the specialty vehicle sector, the Shyft Group has announced a merger with Aebi Schmidt Group. Together, they aim to become a dominant force within the North American market, bolstered by Aebi Schmidt’s established presence in Europe. This merger, described as a fully-stock transaction, will create a leading company in the specialized vehicle manufacturing landscape.

The terms of this deal illustrate a commitment to growth, as every share of Shyft will convert to 1.04 shares in the new entity. Post-merger, existing Shyft shareholders will own 48% of the newly formed company, while Aebi Schmidt shareholders will hold the remaining 52%. This arrangement promises a tax-free experience for Shyft shareholders, having received unanimous board approval from both companies.

Complementary Portfolios

The merger of Shyft and Aebi Schmidt combines complementary products and services, providing clients with an extensive range of offerings. Aebi Schmidt’s expertise in commercial truck equipment, including snow and ice management, street sweeping, and airport services, will be integrated with Shyft's manufacturing strengths in specialty vehicles for commercial, retail, and service markets. This integration aims to enhance service delivery and promote competitive growth in an ever-evolving industry landscape.

Impressive Financial Projections

With significant synergies expected from this merger, estimates suggest that the new company could generate approximately $1.95 billion in revenue and more than $200 million in adjusted EBITDA in the upcoming year, inclusive of synergies. Immediate benefits such as $25 to $30 million in annual synergies are anticipated by the second year. Moreover, a projected uptick in earnings per share within the first year is expected alongside a notable return on invested capital (ROIC) that is predicted to surpass the weighted average cost of capital by the third year following the merger close.

John Dunn, the current CEO of Shyft, expressed optimism regarding this strategic movement, highlighting how melding the strengths of both Shyft and Aebi Schmidt will nurture enhanced operational excellence and extend their innovative capacity. “This merger positions us to improve our resilience while unlocking substantial growth opportunities in commercial truck solutions and infrastructure-related offerings,” he stated.

On the other side, Barend Fruithof, the CEO of Aebi Schmidt, forecasted the emergence of a significantly differentiated leader in the specialty vehicle industry. He emphasized the increased focus on customer-centric innovation and operational excellence that this partnership will foster.

Strategic Benefits and Expectations

The magnitude of this merger offers undeniable strategic and financial advantages, establishing a distinct industry leader capable of capturing expansive market opportunities. North America’s lucrative commercial truck market, contributing around 75% of the fusion entity’s expected revenue, coupled with Aebi Schmidt’s strong European foothold, sets a promising stage for future growth. The complementing nature of both companies’ product offerings will allow improved customer service, innovation, and efficient manufacturing of essential vehicle components, resulting in a highly competitive merged entity.

Anticipated annual cost synergies are estimated between $20 and $25 million, attributed to enhanced operational efficiencies and optimized distribution capabilities. Additionally, the merger is expected to yield over $5 million in revenue synergies from immediate sales opportunities stemming from cross-selling and geographical expansion. The realization of these synergies is scheduled to commence within two years following the transaction closure, paving the way for impressive combined EBITDA margins.

Governance and Leadership Structure

The governance framework for the new entity will comprise an 11-member board, with five members appointed by Shyft and six by Aebi Schmidt, ensuring independent oversight with seven independent directors.

Barend Fruithof will take on the roles of President and CEO of the new company, primarily operating out of the U.S. James Sharman from Shyft has been appointed as the Chairman of the Board. John Dunn, the incumbent CEO of Shyft, will continue post-closing to facilitate a seamless integration of the two companies.

Looking Ahead

The finalized merger is expected midway through 2025, pending standard closing conditions, including necessary regulatory approvals and shareholder consent from Shyft. With funding secured for the transaction, this merger is pegged to refine the operational and market strengths of both organizations, marking a new era for specialized vehicle solutions.

Investors can anticipate detailed information through an upcoming conference call, aiming to elaborate on this game-changing transition within the vehicle industry. This merger not only symbolizes the strategic ambitions of both companies but also reinforces their commitment to delivering exceptional value to their shareholders and customers alike.

In conclusion, the coming together of these two industry powerhouses signals a transformative potential for the specialty vehicle market, one underscored by innovation, growth and an unwavering customer focus.