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Textron To Purchase Arctic Cat In $247 Million All-Cash Deal

Arctic Cat Inc. announced it has signed a definitive merger agreement under which Textron Inc. will acquire Arctic Cat in a cash transaction valued at approximately $247 million, plus the assumption of existing debt.

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Arctic Cat Inc. announced it has signed a definitive merger agreement under which Textron Inc. will acquire Arctic Cat in a cash transaction valued at approximately $247 million, plus the assumption of existing debt.

Under the terms of the agreement, which was unanimously approved by the Arctic Cat board of directors, Textron, through a wholly owned subsidiary, will commence a tender offer to purchase all outstanding shares of Arctic Cat’s common stock. Arctic Cat anticipates that tender offer materials will be provided to shareholders no later than February 7, 2017. The completion of the acquisition is subject to the usual regulatory approvals.

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[pullquote]“Arctic Cat’s board believes that Textron’s offer delivers compelling and immediate value to our shareholders,” said Christopher Metz, Arctic Cat’s president and chief executive officer. “This transaction presents increased opportunities for the business to leverage our combined scale, accelerate growth and enhance product innovation in ways that will benefit our customers, dealers and employees.” Textron is a multi-industry company with over $13 billion in annual revenues and approximately 35,000 employees.[/pullquote]

Arctic Cat will become part of Textron’s Specialized Vehicles business, maintaining the Arctic Cat brand, as well as its current manufacturing, distribution and operational facilities, with a focus on growing the business. Arctic Cat said in a statement the combined businesses will be better positioned to be a powersports industry leader with a wider product line-up, enabling more aggressive investment in product development, dealer networks, marketing and customer service.

[pullquote]Metz added: “We are proud of the progress our team has made to lay the foundation for Textron to continue taking this company forward. Textron plans to build on Arctic Cat’s strong brand and history of innovation. We expect many Arctic Cat employees to benefit from expanded career opportunities as part of a larger, more diversified company. On behalf of the Arctic Cat board and management team, we thank our dedicated employees for their hard work, commitment and pride in making Arctic Cat an enduring competitor and beloved brand in the powersports market. We are excited about Arctic Cat’s future.”[/pullquote]

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Textron Specialized Vehicles Inc. is a global manufacturer of golf cars, utility and personal transportation vehicles, professional turf-care equipment, and ground support equipment. Its vehicles are found in environments ranging from golf courses to factories, airports to planned communities, and theme parks to hunting preserves.

The news of an acquisition may not be a surprise to some dealers as Arctic Cat announced it lost $12.8 million in the second fiscal quarter of last year.

[pullquote]”I personally think that is the best thing for Arctic Cat,” Clark Peterson of Cities Edge Motorsports told StarTribune. “Anybody who is solidly financially backed would be a better thing for the dealer. Then Arctic Cat can keep being competitive with the Japanese and other original equipment manufacturers. And they can invest more in their dealers, with long term projections in mind and not so short term.”[/pullquote]

According to the StarTribune report, dealers wondered if Textron would adopt some different sales strategies. Dealers told ST that Arctic Cat sometimes requires them to carry too much inventory, and sometimes permits competing dealerships to operate too closely to one another.

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