Spartan Motors has reached an agreement to acquire Utilimaster in an all-cash transaction valued at approximately $45 million. Utilimaster manufactures specialty vehicles made to customer specifications in the delivery and service market, including walk-in and hi-cube vans, as well as truck bodies.

Spartan said the acquisition of Utilimaster is expected to add approximately $105 million in annualized revenues and be slightly dilutive to earnings in the first full year and accretive by year two. Utilimaster has approximately 550 employees and more than 550,000 square feet of manufacturing capacity at its corporate headquarters in Wakarusa, Ind.

The majority of Utilimaster's revenues are in the delivery and service market, which includes walk-in vans for the package delivery, bakery/snack delivery and linen/uniform rental markets. Its remaining revenues are attributable to commercial truck bodies, along with service, parts and accessories.

Under the terms of the purchase agreement, Spartan will pay $50 million in cash, less a net working capital adjustment. In addition, Spartan has agreed to pay contingent earn-out payments of up to $7 million based primarily on the Utilimaster operation exceeding revenue milestones.