Spartan Motors has sold its Emergency Response (ER) segment to Rev Group.
Rev (REVG) paid around US$55m in cash at closing, which is subject to a net working capital adjustment and assumed certain liabilities of the ER segment.
The transaction has been unanimously approved by the board.
“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 speciality vehicles markets where we see the biggest opportunity to generate higher returns,” said Spartan Motors president and CEO, Daryl Adams.
“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.”
The ER business unit had revenue of around US$253.3m for the 12 months ended 30 September, 2019. Proceeds from the sale, effective 1 February, 2020, will be initially used to pay down debt and support working capital requirements.
As part of the transaction, REVG purchased the rights to the Spartan brand name. Accordingly, the company will change its corporate name in the coming months, subject to shareholder approval. REVG has licensed the Spartan name and the Spartan diamond logo back to the company for use in its RV chassis business.
“The divestiture marks an important step in our business transformation,” added Adams. “E-commerce, electrification and autonomous technologies are driving dramatic change in the industry and this action positions us to continue to provide solutions for our customers.”