The Shyft Group SHYF, a specialty vehicle manufacturer, and Aebi Schmidt Group have entered into a definitive agreement for an all-stock merger to create a leading specialty vehicles company for significant growth. Per the contract terms, each Shyft share will be exchanged for 1.04 shares of the new company. Shyft shareholders will own 48% of the combined entity upon closing, while Aebi Schmidt shareholders will hold 52%. Both companies' boards have unanimously approved the tax-free transaction.
The merger brings together Aebi Schmidt’s expertise in specialty vehicles, including commercial truck upfitting, snow and ice management, street sweeping, pavement marking, airport snow and ice solutions and agricultural products with Shyft’s manufacturing, assembly, and upfitting capabilities for commercial, retail and service specialty vehicles. This combination creates a comprehensive suite of offerings for customers, supported by a robust presence in the North American market and complemented by Aebi Schmidt’s European footprint. The enhanced financial position of the merged entity is expected to support profitable growth and deliver value to shareholders.
The new company will be a global leader in specialty vehicles, with approximately 75% of its revenues derived from the North American market, bolstered by Aebi Schmidt’s European operations. The merger positions the combined entity to capitalize on growth opportunities in high-margin markets, including the North American commercial truck segment.
The merger will also expand the product portfolio, offering a diverse range of premium brands and services. The enhanced production capabilities, distribution network and innovative solutions will provide increased value to customers and drive growth. Expected synergies include $20-$25 million in annual cost savings through operational efficiencies and an additional $5 million in adjusted EBITDA from cross-selling and geographic expansion. These synergies are anticipated by the second year post-merger, resulting in double-digit EBITDA margins.
Financially, the combined company expects to achieve sustainable growth, stronger margins and improved free cash flow, with pro forma 2024 revenues estimated at $1.95 billion and adjusted EBITDA exceeding $200 million. Pro forma net debt will be approximately $485 million as of Sept. 30, 2024. The merger is projected to enhance earnings per share and deliver a return on invested capital exceeding the weighted average cost of capital within three years, offering substantial value to shareholders.
Barend Fruithof, Aebi Schmidt’s CEO, will lead the new company, with Shyft’s chairman James Sharman serving as chairman of the board. John Dunn will assist with the transition post-merger. The board will comprise 11 members, including five nominated by Shyft, six by Aebi Schmidt and seven independent directors. Aebi Schmidt’s majority shareholder, Peter Spuhler, will own approximately 35% of the company.
The combined company will trade on NASDAQ, domiciled in Switzerland and maintain a significant presence in the United States. The merger is expected to close by mid-2025, subject to customary regulatory approvals and shareholder consent. Shyft and Aebi have obtained fully committed financing for the company.
SHYF currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the auto space are Dorman Products, Inc. DORM, Tesla, Inc. TSLA and Blue Bird Corporation BLBD, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for DORM’s 2024 sales and earnings suggests year-over-year growth of 3.66% and 51.98%, respectively. EPS estimates for 2024 and 2025 have improved 75 cents and 88 cents, respectively, in the past 60 days.
The Zacks Consensus Estimate for TSLA’s 2024 sales suggests year-over-year growth of 3.36%. EPS estimates for 2024 have improved 22 cents in the past 60 days. EPS estimates for 2025 have improved 7 cents in the past 30 days.
The Zacks Consensus Estimate for BLBD’s fiscal 2025 sales and earnings suggests year-over-year growth of 10.97% and 12.14%, respectively. EPS estimates for fiscal 2025 have improved 18 cents in the past 30 days.
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