Core Viewpoint - Federal Signal Corporation has signed a definitive agreement to acquire Scranton Manufacturing Company Inc. d/b/a New Way Trucks for an initial purchase price of $396 million, with additional considerations bringing the total potential cost to $480 million, reflecting a strategic expansion into the waste and recycling industry [1][3]. Financial Details - The initial purchase price of $396 million assumes a cash-free, debt-free transaction and is subject to post-closing adjustments. An additional $30 million will be paid for New Way's manufacturing facilities and real estate rights [1]. - The acquisition includes a contingent earn-out opportunity of up to $54 million based on specified financial targets over two years [1]. - The combined initial purchase price represents a multiple of approximately 11x New Way's projected 2026 EBITDA and about 7x projected 2028 EBITDA, factoring in expected synergies [1]. - The transaction will be financed through cash on hand and Federal Signal's credit facility, with a pro-forma net debt leverage ratio anticipated to be less than 1.5x upon completion [1]. Company Overview - New Way is recognized as a leading U.S. manufacturer of refuse collection vehicles, known for its automated side loaders, rear loaders, and front loaders, serving both municipal and private-hauler customers [2]. - The acquisition is expected to enhance Federal Signal's position in the environmental solutions sector and create a new growth vertical within its Environmental Solutions Group [3]. Strategic Implications - The acquisition is seen as a meaningful expansion into the recession-resilient waste and recycling industry, with significant opportunities for synergies and growth acceleration for New Way [3]. - Federal Signal's expertise in selling refuse equipment and its specialty vehicle platform are expected to drive New Way's growth and margin trajectory [3]. Future Outlook - The transaction is expected to be neutral to earnings per share (EPS) in 2026 but accretive in subsequent years, with anticipated EPS accretion of between $0.40 and $0.45 in 2028, alongside expected annual run-rate synergies of $15 million to $20 million [5][6].