Federal Signal to Acquire New Way Trucks for $396M

Federal Signal (FSS) has signed a definitive agreement to acquire Scranton Manufacturing Company d/b/a New Way Trucks, a U.S.-based designer and manufacturer of refuse collection vehicles, for an initial purchase price of $396M. As part of the acquisition, the company will also pay additional consideration of $30M for New Way’s manufacturing facilities and associated real estate rights in Iowa and Mississippi. The initial purchase price is subject to certain post-closing adjustments. In addition, there is a contingent earn-out opportunity of up to $54M, based on the achievement of certain specified financial targets over a two-year period. When adjusted for anticipated tax benefits, estimated at $60M, combined initial purchase price represents a multiple of approximately 11x New Way’s projected 2026 EBITDA, and a multiple of approximately 7x New Way’s projected 2028 EBITDA, inclusive of expected synergies. The transaction will be financed with a combination of cash on hand and availability under Federal Signal’s credit facility. New Way manufactures a range of automated side loaders, rear loaders, and front loaders in its two primary U.S. production facilities, serving both municipal and private-hauler customers. The company anticipates completing the transaction during Q4, subject to regulatory approval and customary closing conditions.