Shyft Group, Inc. (NASDAQ:SHYF) shares traded higher on Monday after the company disclosed an all-stock merger with Aebi Schmidt Group to form a specialty vehicles company.

As per the deal, Shyft shareholders will receive 1.04 shares of the combined company's stock for each Shyft share, owning 48% of the new entity, while Aebi Schmidt shareholders will hold 52%.

The merger will integrate Aebi Schmidt's specialty vehicle offerings—spanning commercial truck upfitting, snow and ice management, street sweeping, pavement marking, airport solutions, and agricultural equipment—with Shyft's expertise in manufacturing and upfitting for commercial, retail, and service vehicles.

This combination creates a comprehensive product suite for customers, leveraging a robust North American platform, a strong European footprint, and an enhanced financial foundation to drive profitable growth and maximize shareholder value.

The transaction is anticipated to close by mid-2025, pending customary regulatory approvals, Shyft shareholder approval, and other closing conditions.

Shyft and Aebi Schmidt anticipate achieving $20 million to $25 million in annual cost synergies through cost optimization and operational efficiencies.

Additionally, the company expects around $5 million in adjusted EBITDA growth from near-term revenue synergies driven by cross-selling and geographic expansion.

These synergies are projected to materialize within two years post-merger, delivering double-digit EBITDA margins for the combined entity.

The combined organization is positioned for long-term profitable growth, improved margins, and enhanced free cash flow, enabling sustainable value creation and access to lower-cost capital. Pro forma estimates for 2024 include revenue of $1.95 billion and adjusted EBITDA exceeding $200 million, inclusive of synergies. As of September 30, 2024, pro forma net debt is projected to be approximately $485 million.

The transaction is anticipated to be accretive to EPS by the first year and deliver ROIC exceeding WACC by the third year post-close, offering significant value for shareholders.

Following the transaction, the combined company will be listed on NASDAQ and incorporated as a Swiss-domiciled stock corporation, with its headquarters in Switzerland and a substantial operational footprint in the U.S.

John Dunn, President and CEO of Shyft, said, "Combining with Aebi Schmidt is a powerful next step in Shyft's strategy as we leverage the strengths of both companies' industry leading brands, innovative products, extensive customer relationships, and manufacturing excellence."

Barend Fruithof, CEO of Aebi Schmidt added, "By bringing together the capabilities and expertise of both companies, we are establishing a truly differentiated leader in the specialty vehicles industry supported by our shared focus on customer-centric innovation and operational excellence. Aebi Schmidt has a proven track record of driving strong financial performance and successfully executing M&A to deliver significant revenue and adjusted EBITDA growth."

As of September 30, Shyft's cash and cash equivalents stood at $21.4 million.

Price Action: SHYF shares are up 14.6% at $14.58 at the last check Monday.

Photo via Shutterstock.

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