The Shyft Group, Inc. (SHYF), a manufacturer of motor vehicles, announced on Monday a definitive agreement to merge in an all-stock transaction with Aebi Schmidt Group, a Swiss company specializing in smart product systems and services. This merger aims to form a specialty vehicles company poised for significant growth.
Upon completion of the transaction, Shyft anticipates it will enhance earnings per share. Shareholders of Shyft will receive 1.04 shares of the newly formed company for each of their current shares. Post-merger, Shyft shareholders will own 48% of the new company, while shareholders of Aebi Schmidt will hold a 52% stake.
Peter Spuhler, Aebi Schmidt's primary shareholder and a renowned Swiss investor, will own approximately 35% of the merged entity once the deal is finalized.
The anticipated benefits of the merger include driving sustainable growth, enhancing profit margins, and increasing free cash flow. In 2024, the combined company is projected to achieve an estimated revenue of $1.95 billion and an adjusted EBITDA exceeding $200 million, factoring in expected synergies.
The transaction, approved by the boards of both companies, is structured to be tax-free. Full financing for the merged company has been secured, with the closing anticipated by mid-2025.
This merger will integrate Aebi Schmidt's specialty vehicles, such as snow and ice removal equipment, street sweepers, and agricultural solutions, with Shyft's capacity in manufacturing and upfitting commercial and service vehicles, thereby expanding the range of products available to their customers.
The alliance will establish a specialty vehicle company with a significant footprint in North America, constituting about 75% of the revenue, alongside Aebi Schmidt's operations in Europe.
Both companies expect to achieve annual run-rate cost synergies of $20 to $25 million through enhanced cost management and optimized operations. They also foresee an additional $5 million in adjusted EBITDA through sales expansion and entry into new markets. These efficiencies are expected to be realized within the second year post-merger, resulting in double-digit EBITDA margins for the combined enterprise.
The Board of Directors for the newly formed company will comprise five members from Shyft and six from Aebi Schmidt, with seven being independent directors.
Barend Fruithof, the current CEO of Aebi Schmidt, will assume the role of CEO of the merged company, headquartered in the US. James Sharman, the Chairman of Shyft, will become the Chairman of the new Board, while Shyft CEO John Dunn will remain to facilitate a seamless integration process.
As of Friday, SHYF had closed at $12.72 on the Nasdaq, reflecting a decrease of 0.13 cents or 1.01%. However, in pre-market trading, SHYF rose by 0.33 cents to $13.05.
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