Management & Operations

NABI, Optima, Blue Bird merge

Posted on December 6, 2006

When we interviewed Robert Shaughnessy, president and CEO of North American Bus Industries Inc. (NABI) in Anniston, Ala., for an article that appeared in the August 2006 issue [“Q&A With NABI’s Robert Shaughnessy,” beginning on pg. 40], the transit bus manufacturer was in the process of acquiring Optima Bus Corp., a bus-builder competitor based in Wichita, Kan.

A few months later, it was announced that an affiliate of Cerberus Capital Management, the New York-based equity investor that had acquired NABI early in 2006, had acquired Blue Bird Corp., a manufacturer of commercial and school buses in Fort Valley, Ga.

So we thought it would be wise to follow up with Shaughnessy on those recent developments and how they will impact the industry. Here’s what he told METRO Editor Steve Hirano.

First off, just for my own understanding of the situation, was it NABI that acquired Optima, or was it Cerberus? Or is this distinction important at all?
Who acquired whom is far more complicated than your question implies. Functionally, Optima and NABI will operate as a single business unit.

When we spoke for the August Q&A, the announcement of NABI’s merger with Optima was still in the offing. What, specifically, attracted you to Optima?
The Optima merger filled a product void for a 30-foot bus and provided a second brand for 35-foot buses. Additionally, Optima has a very highly regarded trolley. The subsequent Blue Bird acquisition further expanded these bus lengths as well.

During our conversation you mentioned, and I quote, “There is room for a 30-foot bus, too.” Was that a furtive reference to the 30-foot Optima bus that you were in the process of acquiring?
My response to the August question was not specifically the result of Optima negotiations. I was trying to make the point that in some situations a 30-foot bus is needed, while in others a 40-foot bus may be needed or a 60-foot bus is needed. Several factors including population density, ridership levels, etc., are important in determining the size of bus needed. In essence, the real question is how many seats do you need to fulfill requirements in specific portions of the market.

In what areas (manufacturing, parts and service, marketing, etc.) will NABI and Optima realize synergies through this acquisition?
Synergies resulting from the NABI/ Optima combination include procurement, marketing, sales, field service and several other areas.

Are you planning to centralize leadership of these companies? If so, at what level?
In the future, there will be two bus groups. One group will be identified as transit buses and the other will be identified as school buses. Each will report to a general manager.

The about-to-be-named new company will have a president and chief executive officer, chief financial officer, senior vice president of operations and a few other disciplines. The “headquarters” staff will be very small, perhaps as few as eight to 10 people.

How will Blue Bird fit into the NABI-Optima structure? Or will it remain largely independent?
Blue Bird’s transit bus line will become part of the transit group as described above. The school bus line will be a part of the school bus organization as described above.

Can we expect more product development, or less, now that you’ve created a range of 30- to 60-foot buses?
Additional and accelerated product development is anticipated. There are a number of potentially fruitful developments requiring further evaluation before going into production.

How will end users be affected by this acquisition?
End users will have confidence that this company is the most financially stable in the industry with access to leading-edge technology and additional funding for expansions or acquisitions. The company will be a single source for virtually all bus needs.

The already best parts aftermarket operation in the industry will become even more effective.

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