Transit Holdings, Inc., a U.S. subsidiary of New Flyer Industries Inc. (NFI Group), has acquired 100 per cent of the equity interests in ARBOC Specialty Vehicles, LLC for a purchase price of $95 million, subject to certain purchase price adjustments, including satisfaction of debt. The acquisition represents a continuation of NFI Group's growth and diversification strategy.
Established in 2008, ARBOC is a North American manufacturer of low-floor body-on-chassis (or "cutaway") bus technology. These buses range between 21 and 35 feet long, and operate in transit, paratransit and shuttle applications.
The North American cutaway bus market has an estimated annual volume of between 16,000 to 18,000 units, which is more than three times the current estimated size of the heavy-duty transit bus market, and more than six times the current estimated motor coach market, based on annual units produced. Today, the installed base of cutaway buses is predominantly high-floor in configuration, with low-floor buses comprising less than 5 per cent of the total cutaway market, according to NFI Group.
ARBOC has delivered more than 2,500 buses, or more than 70 per cent of the estimated total low-floor cutaways sold in Canada and the U.S. over the past five years. As the U.S. population ages and ease of access becomes more of a focus, NFI Group management believes ARBOC is ideally positioned to grow with the demand for low-floor cutaway and medium buses with greater accessibility, following the migration that occurred in heavy-duty transit space.
Management expects ARBOC to deliver approximately 360 buses in 2017 with a revenue mix comprising of $36.3 million for bus sales and $1.5 million for parts sales, and expected 2017 Adjusted EBITDA of approximately $9.1 million.
In addition to its cutaway bus product portfolio, ARBOC has introduced a medium-duty low-floor transit and shuttle bus based on ARBOC's own chassis design. The bus is currently completing testing at the Altoona Bus Research and Testing Center under the Federal Transit Administration Model Bus Testing Program to ten-year structural durability standards. The bus has received favorable market response and ARBOC has already received initial firm orders for deliveries in 2018.
"The acquisition of ARBOC provides us with complementary product lines and a unique opportunity to continue with growth and diversification, as NFI Group now has a full suite of transit buses and motor coaches to offer to North American public transit agencies and private operators," said Paul Soubry, NFI Group's President and Chief Executive Officer. "ARBOC is a proven low-floor cutaway builder and provides us with an entry point into both the cutaway and medium-duty transit bus markets, with high quality, proven and competitively priced products."
Located in Middlebury, Indiana, ARBOC employs approximately 100 people from a 112,000 square foot facility.