AIP Takes Control of E-ONE
American Industrial Partners buys the Federal Signal division for $20 million, well below analyst expectations.
July 17, 2008
Federal Signal Corp. agreed to unload its E-ONE fire-rescue manufacturer, selling the unit to American Industrial Partners for roughly $20 million, with E-ONE management co-investing alongside the firm in the deal. The transaction is expected to close in 30 days.
Federal Signal put the struggling unit on the block in February, and in its fourth-quarter earnings call in April, revealed it had already been engaged in discussions with potential buyers.
E-ONE, based in Ocala, Fla., designs and manufactures fire rescue vehicles, including custom and commercial pumpers and tankers, aerial ladders and platforms, and rescue vehicles of all sizes.
In the April conference call accompanying Federal Signal's earnings, interim CEO Jim Goodwin spoke briefly about the company's decision to unload E-ONE, noting that weak market conditions have led to significant reductions in backlogs industry wide. However, Goodwin noted that the division's performance had improved under the guidance of newly installed E-ONE president Peter Guile, crediting him with expanding the company's dealer network.
In 2007, Federal Signal's fire-rescue division suffered an operating loss of $11 million as a result of lower sales and fixed cost absorption at E-ONE. Net sales in the division fell 14% year over year.
The struggles are not confined to E-ONE. American LaFrance, the former Chrysler unit, fell into bankruptcy protection earlier this year, emerging from Chapter 11 in May.
The $20 million deal represents a significant discount to what analysts were expecting the E-ONE unit to fetch. Some estimates had the division being sold for as much as $168 million.
American Industrial Partners, meanwhile, has a history in the space. As it's name implies, the firm specializes on deals in the industrials sector, and previously backed Collins Industries, a manufacturer of ambulances and school buses. The firm is investing in E-ONE through its fourth fund.
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