-
Vertically integrated, multi-channel market leader in Off-Road Jeep
and truck aftermarket accessories with sales of approximately $740
million and significant growth potential
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Highly complementary products serving off-road enthusiast customers;
extends Polaris market reach
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Compelling financial benefits, including significant synergy
opportunities
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Expected accretion to earnings per share, excluding purchase
accounting/acquisition costs, for the full year 2017
MINNEAPOLIS--(BUSINESS WIRE)--
Polaris Industries Inc. (NYSE: PII) (“Polaris” or the “Company”)
announced today that it has entered into an agreement to acquire
Transamerican Auto Parts Company (“TAP”), a privately held, vertically
integrated manufacturer, distributor, retailer and installer of off-road
Jeep and truck accessories, for an aggregate consideration of $665
million, subject to customary closing adjustments. After adjusting for
the $115 million estimated net present value of future tax benefits, the
purchase price implies a multiple of approximately 9.0 times TAP’s
EBITDA for the 12 months ended September 30, 2016.
TAP is a leader in the highly fragmented and growing $10+ billion Jeep
and truck accessory market. TAP sells and installs an extensive line of
accessories for Jeep and truck enthusiasts, including products
manufactured under its seven proprietary, industry-leading aftermarket
brands: PRO COMP®, RUBICON EXPRESS, SMITTYBILT®,
POISON SPYDER™, G2™, LRG® and TRAIL MASTER®. TAP
is the largest retailer and installer in the North American market,
selling through its own retail and on-line network while also supporting
numerous independent accessory retailers/installers. For the last 12
months ended September 30, 2016, TAP generated approximately $740
million in sales, and from 2012 through 2015, achieved compound annual
sales growth of 15 percent and compound annual EBITDA growth of 17
percent.
“We are excited to add TAP’s market leading multi-channel business,
proprietary brands, proven management team and experienced employees to
the Polaris portfolio,” said Polaris Chairman and Chief Executive
Officer Scott W. Wine. “This transaction is consistent with our long
term strategy, provides us an immediate leadership position in a growing
market, and allows us to accelerate Polaris’ growth and profitability.
TAP’s products and services for customers in the off-road
four-wheel-drive (‘4WD’) market correspond closely to our Off-Road
Vehicle (‘ORV’) business. Further, by broadening TAP’s proprietary
product lines, expanding its retail and distribution footprint, where
appropriate, and cross-selling both companies’ extensive product
offerings to a large combined installed base, we believe we will create
significant value for our stakeholders. Our similar cultures, centered
on innovative brands and performance, make TAP a great addition to
Polaris’ expanding portfolio.”
“Over the past 55 years, our employees have built a company that prides
itself on serving our customers with quality products at competitive
prices,” said Greg Adler, TAP’s President and Chief Executive Officer.
“We see tremendous opportunity for further growth as we become an
integral part of the Polaris organization. Combining TAP with Polaris’
aftermarket brand portfolio facilitates significant synergies, while
Polaris’ financial resources provide the backing we need to pursue a
variety of growth prospects we have identified across the organization.”
Strategic and Financial Benefits
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Highly Complementary Product Lines: This acquisition creates a
leading company across the 4WD off-road enthusiast market and extends
Polaris’ presence in aftermarket accessories to attract new consumers
to Polaris’ existing portfolio. In particular, TAP’s four-wheel-drive
aftermarket products are highly complementary to Polaris ORV business.
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Expanded Accessories Portfolio and New Product Innovation
Capabilities: Significant opportunities exist to incorporate TAP’s
considerable off-road product development expertise into the creation
of innovative accessories and capabilities for Polaris Engineered
product offerings, while utilizing Polaris’ financial strength to
accelerate TAP’s product development for its Jeep and truck customers.
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Significant Growth Potential: TAP manufactures and sources
seven proprietary brands and sells and distributes products through
multiple channels, including 75 4Wheel Parts stores and two robust
online platforms (www.4wheelparts.com
and www.4wd.com).
TAP sells its brands, as well as more than 200 non-proprietary leading
brands, through its own distribution channels and various independent
retailers/installers. Polaris’ financial strength creates
opportunities to accelerate TAP’s market penetration, and where
appropriate, sell select Polaris aftermarket brands through TAP’s
retail outlets.
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Compelling Financial Benefits: The transaction is
expected to be accretive to Polaris’ earnings per share, excluding
purchase accounting/acquisition costs, for the full year 2017. The
Company expects meaningful annual cost savings within three years
following closing, primarily from efficiencies related to procurement,
distribution, and expanded product offerings.
The transaction is subject to regulatory approval and other customary
closing conditions, and is expected to close by year-end 2016. Following
the closing of the transaction, TAP will operate as a distinct business
unit reporting to Steve Eastman, Polaris’ PG&A President. Polaris
expects to fund the acquisition with borrowings under existing credit
facilities.
BofA Merrill Lynch acted as exclusive financial advisor to Polaris, and
Faegre Baker Daniels LLP acted as Polaris’ legal advisor. Jefferies
acted as lead financial advisor to Transamerican. Houlihan Lokey also
served as financial advisor to TAP and Sullivan & Cromwell acted as
TAP’s legal advisor.
Call and Webcast information
Polaris Industries Inc. will host a conference call and webcast today at
8:00 a.m. central time to further discuss the TAP acquisition. The call
will be hosted by Scott Wine, Chairman and Chief Executive Officer; Mike
Speetzen, Chief Financial Officer; and Bob Mack, Senior Vice President,
Corporate Development and Strategy. A slide presentation and link to the
webcast will be posted on the Polaris Investor Relations website at ir.polaris.com.
To listen to the conference call by phone, dial 877-706-7543 in the U.S.
and Canada, or 973-200-3967 internationally. The Conference ID is #
98314655.
A replay of the conference call will be available approximately two
hours after the call for a one-week period by accessing the same link on
our website, or by dialing 855-859-2056 in the U.S. and Canada, or
404-537-3406 internationally.
About Polaris
Polaris Industries Inc. (NYSE: PII) is a global powersports leader with
annual 2015 sales of $4.7 billion. Polaris fuels the passion of riders,
workers and outdoor enthusiasts with our RANGER®, RZR®
and Polaris GENERAL™ side-by-side off-road vehicles; our SPORTSMAN®
and Polaris ACE® all-terrain off-road vehicles; Victory®
and Indian Motorcycle® midsize and heavyweight motorcycles;
Slingshot® moto-roadsters; and Polaris RMK®, INDY®,
Switchback® and RUSH® snowmobiles. Polaris
enhances the riding experience with parts, garments and accessories sold
under multiple recognizable brands, and has a growing presence in
adjacent markets globally with products including military and
commercial off-road vehicles, quadricycles, and electric vehicles. www.polaris.com
Except for historical information contained herein, the matters set
forth in this news release, including management’s expectations
regarding the effective purchase price, financing of the purchase price,
timing of closing, synergies and other benefits of the acquisition, and
future performance of TAP and the combined companies are forward-looking
statements that involve certain risks and uncertainties that could cause
actual results to differ materially from those forward-looking
statements. Potential risks and uncertainties include factors
such as the proposed transaction may not be completed, or completed
within the expected timeframe; costs relating to the proposed
transaction may be greater than expected; the possibility that a
governmental entity may prohibit, delay or refuse to grant a necessary
regulatory approval in connection with the proposed transaction;
anticipated tax benefits may not be achieved by the Company; problems
may arise in integrating the businesses of the two companies and the
integration may not be successful; the combined companies may be unable
to achieve the anticipated synergies or those benefits may take longer
to realize than expected; the businesses of one or both companies may
suffer as a result of uncertainties surrounding the proposed transaction
including disruption of relationships with customers, employees or
suppliers; increased competition and its effect on pricing; the combined
companies may not perform as expected following the closing; and other
risks beyond the control of either party. Investors are also
directed to consider other risks and uncertainties discussed in
documents filed by the Company with the Securities and Exchange
Commission. The Company does not undertake any duty to any person
to provide updates to its forward-looking statements.
LRG® is a registered trademark of Custom
Wheel House, LLC
View source version on businesswire.com: http://www.businesswire.com/news/home/20161012005401/en/
Source: Polaris Industries Inc.