Blue Bird Receives A Non-Binding Indication Of Interest Letter, Spitfire Opposes The Deal

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Maudes Capital


  • Blue Bird Corporation is a stable and growing business. It is the perfect investment for a PE.
  • American Securities LLC owns 57% of the total outstanding shares of the company. They sent a letter of interest 10 days ago. It is a great opportunity.
  • American Securities LLC will try to take the company private. An activist investor and some hedge funds will definitely ask for a fair price.


In my opinion, the best way to study a company is studying current shareholders. I like finding sophisticated money managers inside a company since they study it before I do it.

Blue Bird Corporation (NASDAQ:BLBD) ("Blue Bird") is an outstanding opportunity. It is undervalued as you can read in this other article. Also, the main shareholder, American Securities LLC, which owns 57% of the total outstanding shares, submitted a non-binding indication of interest letter. There is even more since the hedge fund Spitfire (13D), which owns 7%, intends to oppose the deal.

The company

Blue Bird Corporation is an old company. It was founded in 1927. It manufactures and sells school buses in North America. This industry is quite stable and has low risk. Therefore, it is appropriate for private equities.

The company has experienced great revenue growth as well as profit growth in the last five years. Take a look at the following figures from an investor presentation:



In addition, the EV/EBITDA ratio does not look expensive - it is 7.8x. Also, the company does not have a tremendous amount of debt, which is normally the case after an LBO:


Cerberus sold the stake to American Securities LLC

Cerberus bought the company in 2006 and sold a small part in February 2015. I can imagine that they have been looking for a buyer, and they found it last month. The transaction has been very profitable for this PE:

"Cerberus is proud to have contributed to Blue Bird's strong turnaround since we initially acquired it in 2006," said Dev Kapadia, Managing Director of Cerberus. "Blue Bird has been a terrific investment for Cerberus with EBITDA improving from a loss-making level at the time of acquisition in 2006 to a projected $72-$75 million for 2016. Under the present management team, we have

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Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in BLBD over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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