Starcraft Agrees to Merger; Goshen Company Hopes Joining with Fuel Cell Maker Will Spur Growth

From South Bend Tribune

GOSHEN, IN — In a deal that Starcraft Corp. says should spur its growth and possibly consumer demand for fuel cell vehicles, the automotive supplier announced Thursday it has agreed to merge with Irvine, Calif.-based Quantum Fuel System Technologies Worldwide.

The deal, which is valued at about $185 million and has the unanimous support of both boards of directors, still has to be approved by shareholders. If all goes according to plan, however, the deal is expected to close in the first quarter of 2005.

Under the terms of the deal, Starcraft will be operated as a wholly-owned subsidiary of Quantum. Mike Schoeffler, the current president of Starcraft, will serve as president of the subsidiary.

The merger gives Starcraft access to Quantum’s fuel cell development and manufacturing capabilities, as well as business relationships with major companies.

Quantum, on the other hand, gains the ability to advance its fuel cell technology with Starcraft’s production capabilities.

“We’ve really been innovative and developed the market we are in today,” Schoeffler said. “A lot of those attributes can help spur along hydrogen efforts.

“The Quantum people are innovative, and now they have to figure out the most innovative way to bring those products to a vehicle. We think we provide that.”

Under the arrangement, Starcraft common shareholders would receive 2.34 shares of Quantum stock for every share of Starcraft stock. After the transaction is completed, former Starcraft shareholders would own approximately 40 percent of Quantum shares.

The merger will give Starcraft broad access to a variety of large corporations. Quantum has product commercialization alliances with General Motors, Sumitomo and IMPCO and also supplies products for Toyota, Hyundai, Suzuki, Ford, Yamaha and the U.S. Army.

“It was a very key item,” Schoeffler said. “We’ve got the right blueprint (for success in our market), now we need to expand it.”

What this means for Starcraft’s future in Goshen is “up in the air,” Schoeffler said. Starcraft recently began operating a plant in Fort Wayne, and where future growth occurs has yet to be determined.

However, the merger “is not going to be taking anything away from anywhere,” Schoeffler said.

Starcraft’s operations are composed of subsidiaries Tecstar and Wheel to Wheel.

Jeffrey Beitzel, co-chief executive officer of Starcraft, will become chief operating officer of Quantum.

Both companies’ stock is traded on the Nasdaq. By the time trading closed Tuesday, shares of Starcraft jumped 75 to $12.05, while Quantum dropped 12 cents to close at $7.33. But in after- hours trading Tuesday, Starcraft shares had risen an additional $3.25 (or nearly 27 percent) by 5:30 p.m.

“There’s a lot of opportunities and a lot of ways to advance fuel cell technology, and somehow this country has to decide a way to develop another fuel source,” Schoeffler said.

“We believe we are with the right company to do that.”

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