Federal Signal Corporation, a leader in environmental and safety solutions, announced Monday the signing of a definitive agreement to acquire Truck Bodies and Equipment International (TBEI) for $270 million, subject to post-closing adjustments.
This represents a multiple of 7.2x TBEI’s EBITDA for the twelve-month period ending March 31, 2017, before accounting for synergies. Federal Signal says the acquisition will enable the company to strengthen its market position as a specialty vehicle manufacturer in maintenance and infrastructure markets. This transaction will also allow the company to leverage its expertise in building chassis-based vehicles, significantly expand its exposure to higher growth industrial end-markets and balance the mix of revenues it generates from municipal and industrial markets, the company says.
The transaction is expected to be immediately accretive to the company’s margins and earnings per share (EPS), excluding transaction costs and before giving effect to anticipated synergies.
TBEI has successfully built a portfolio of strong brands, which currently occupy premier market share positions in their respective product categories, through a combination of an intense focus on operational excellence, a comprehensive distribution strategy, and continuous attention to its customers’ primary requirements for a high- quality product and short lead times, the companies say.
During the twelve-month period ending March 31, 2017, TBEI generated revenues of $206 million and an EBITDA margin of approximately 18 percent. TBEI operates five manufacturing facilities throughout the U.S. and employs approximately 850 people.
“The TBEI business is a strong strategic fit with our ESG businesses and allows us to broaden our focus on maintenance and infrastructure markets. With its large industrial customer base, TBEI will accelerate the achievement of our long-standing objective of balancing the mix of revenue streams between municipal and industrial. This acquisition is consistent with our disciplined capital deployment strategy, which targets the acquisition of high performing businesses that grow and compound our cash flow,” says Jennifer L. Sherman, president and CEO at Federal Signal. “TBEI is an outstanding company with clear leadership positions in its end markets, a strong financial profile and a management team that will thrive as part of Federal Signal. This acquisition also represents a significant step towards the attainment of our strategic goal of profitably growing our revenues to over $1 billion.”
TBEI’s President and CEO Robert Fines will be joining Federal Signal’s management team.
“We are excited to join the Federal Signal family and add TBEI’s six established brands to Federal Signal’s portfolio of market-leading businesses,” he says. “There are many similarities between TBEI’s operations and those of Federal Signal and we are confident in our ability to cross-pollinate manufacturing practices, leverage our distribution networks and create a leading platform to serve the needs of our customers.”
Pending customary closing conditions and regulatory approvals, the company says the transaction is expected to close within the next 90 days.