Lafayette, Ind.-based Wabash National Corporation, a diversified industrial manufacturer and North America’s leading producer of semi-trailers and liquid transportation systems, and Goshen, Ind.-based Supreme Industries, Inc., a manufacturer of truck bodies, announced they have entered into a definitive agreement under which Wabash National would acquire all of the outstanding shares of Supreme in a cash tender offer for $21 per share, which represents an equity value of $364 million and an enterprise value of $342 million.
Founded in 1974, Supreme is the second largest U.S. manufacturer of truck bodies with 2016 sales of $299 million, according to the company. The company primarily manufactures light- and medium-duty truck bodies at seven facilities throughout the United States.
“Wabash National has been closely monitoring the transportation landscape as the growth of e-commerce has continued to change the logistics model,” said Dick Giromini, Wabash National’s chief executive officer. “We formally entered the final mile space in 2015 with the launch of our dry and refrigerated truck bodies, and we have been aggressively growing our presence and product offering over the past two years. This acquisition supports these efforts and accelerates our objective to transform our business into a more diversified industrial manufacturer.”
The acquisition will combine Supreme’s medium- and light-duty commercial vehicle portfolio, distribution network, and regional manufacturing locations with Wabash National’s composite technologies, expertise in lean manufacturing and optimization, engineering and design proficiency and supplier relationships, the company says.
Supreme provides Wabash National with significant growth and diversification benefits, in line with the company’s long-term strategic plan, including reduced dependence on dry van trailer demand, reduced cyclicality and new segments for growth.
Wabash National intends to build upon Supreme’s industry leadership, distributed manufacturing and installed sales force capacity to accelerate its successful organic truck body growth initiative, while preserving Supreme’s heritage of excellence in serving customers.
“This is a great opportunity for both companies to combine our strengths to provide an enhanced customer experience within the growing final mile delivery space,” Giromini added. “With Supreme, not only can Wabash Nationalaccelerate organic growth with our innovative DuraPlate®, honeycomb panel and molded structural composite (MSC) truck bodies, we can also provide a broader conventional product offering to our existing customer base.”
Wabash National expects to deliver at least $20 million in annual run-rate cost synergies by 2021. The expected cost synergies are primarily driven by corporate and procurement expenditures, and operational improvement savings. In addition, over time, Wabash National expects to achieve significant incremental revenue opportunities that neither company could obtain on a standalone basis.
“This is an exciting day for Supreme. Combining with Wabash will enhance our ability to innovate more quickly and create more value for customers," Supreme Industries’ CEO Mark Weber said. "We found a cultural fit with Wabash National. Because of their commitment to safety, innovation and customer relationships, I’m confident joining the Wabash National family will benefit our employees, customers and distributors.”
Transaction Terms
Under the terms of the agreement and plan of merger, Wabash has formed an acquisition subsidiary, Redhawk Acquisition Corporation, that will commence a tender offer to purchase all outstanding shares of Supreme for $21 per share. Following the completion of the tender offer, Wabash expects to consummate a merger of Redhawk Acquisition Corp. and Supreme in which shares of Supreme that have not been purchased in the tender offer will be converted into the right to receive the same cash price per share as paid in the tender offer. The tender offer and the merger are subject to customary closing conditions set forth in the merger agreement, including the acquisition by Redhawk Acquisition Corp. of a majority of Supreme’s outstanding shares at the time of the consummation of the tender offer and the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The closing of the acquisition is expected to occur no later than the fourth quarter of 2017.
The transaction is not subject to any financing condition. Wabash has obtained committed bridge financing from Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank. The purchase price is expected to be funded by a combination of notes and cash.
The board of directors of Supreme, having determined that the offer and the merger are advisable, fair to, and in the best interests of Supreme and its stockholders, approved the agreement and plan of merger and the other transactions contemplated thereby, including the tender offer, and recommended that Supreme’s stockholders accept the offer and tender their shares in the offer when it is made.
Baird is acting as financial advisor to Supreme in connection with the transaction, and Haynes & Boone is providing legal advice. Morgan Stanley & Co. LLC is acting as financial advisor to Wabash, and Hogan Lovells is providing legal advice.
