Spartan Motors (NASDAQ: SPAR), best known as a specialty body builder, has sold its Emergency Response (ER) segment so it can focus efforts on its commercial and retail vehicle industries, which include the Utilimaster brand of van bodies.
Spartan sold the ER business, which includes purpose-built fire truck bodies, to REV Group Inc. (NYSE: REVG) for $55 million in cash. The transaction has been unanimously approved by the company’s board of directors. As part of the transaction, Spartan has sold the Spartan name to REV and will rebrand its remaining business in the months ahead.
“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,” said Daryl Adams, president and CEO. “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’s commercial business includes work truck bodies as well as Utilimaster and Royal Truck Bodies. At the 2019 Work Truck Show, Utilimaster showed a concept cargo body designed for last-mile grocery delivery. The body features a Thermo King refrigeration system that allows the customer to cool various cargo chambers to varying degrees. The Thermo King system can hold temperatures to 25 degrees below zero overnight.
Adams told FreightWaves at the event the company expects the last-mile grocery delivery business to reach $100 billion in North America by 2025.
Utilimaster produces walk-in vans, cargo van upfits and the Reach van. The Reach is a smaller version of the often larger walk-in vans. It is built on an Isuzu chassis.
Spartan said the ER business unit had revenue of approximately $253.3 million for the 12 months ended Sept. 30, 2019. Proceeds from the sale, effective this past Saturday, will initially be used to pay down debt and support working capital requirements.
“The divestiture marks an important step in our business transformation. E-commerce, electrification and autonomous technologies are driving dramatic change in the industry, and this action positions us to continue to provide leading solutions for our customers. I appreciate the dedication of our ER associates over the past 45 years and I wish them success,” Adams said.
Did you know?
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Hammer down, everyone!