Textron Announces $247M Deal For Arctic Cat
Textron Inc. is acquiring Minneapolis-based snowmobile and ATV manufacturer Arctic Cat in a $247 million cash transaction.
Analysts that monitor one or both companies have called Wednesday’s deal a good move for both sides, the Star Tribune reported.
By merging with Textron—a Providence, Rhode Island-based aircraft, vehicle and industrial products manufacturer—Arctic Cat will gain ready access to funds it has desperately needed to capture a wider market share. In the face of larger competitors such as Bombardier, Yamaha, Honda and Medina-based Polaris, Arctic Cat was struggling to turn a profit.
Arctic Cat posted a $16.2 million loss for fiscal 2016.
“As a subscale operator … Arctic Cat simply did not have the resources necessary to deliver a suitable return on investment as a stand-alone enterprise,” said Craig Kennison, an equity analyst at financial services firm Baird.
Textron, on the other hand, has regularly ranked within the top half of the annual Fortune 500 list. The company recorded $13.8 billion in revenue and nearly $1 billion in profit in fiscal 2016.
For Textron, the deal for Arctic Cat was arguably a bargain. At the start of 2014, Arctic Cat shares were worth roughly $58 each. That price has slid steadily since to $13.15 at the end of last week.
By acquiring all Arctic Cat shares at a 40.7 percent premium, or $18.50 per share, Textron will receive not only the well-known Arctic Cat brand, but its current inventory and numerous manufacturing, distribution and operational facilities.
Additionally, Artic Cat CEO Christopher Metz said, “We expect many Artic Cat employees to benefit from expanded career opportunities as part of a larger, more diversified company.”
Textron CEO Scott Donnelly called Arctic Cat a “superb fit” within the company’s existing portfolio. “With our recent product introductions in the outdoor recreational vehicle market under the Stampede name, we believe Arctic Cat … provides an excellent platform to expand our portfolio, increase our distribution and create growth within our specialized vehicles business.”
Both companies anticipate the deal to be complete by no later than February 7 following customary conditions and regulatory approvals.