Strategic transaction will establish an immediate leadership position
for Polaris in an attractive and growing market
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Iconic portfolio of premium brands together with a leading
powersports company
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Market leader in one of the largest and fastest growing segments in
the marine industry
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Offers compelling financial benefits, including strong track record
of profitable revenue growth and cash generation
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Transaction expected to close in the third quarter of 2018 and is
anticipated to be immediately accretive to earnings
MINNEAPOLIS--(BUSINESS WIRE)--
Polaris Industries Inc. (NYSE: PII) (“Polaris”) announced today that it
has signed a definitive agreement to acquire Boat Holdings, LLC (“Boat
Holdings”), a boat manufacturer owned by the Vogel family, management
and Balmoral Funds, in an all-cash transaction valued at a net present
value (NPV) of approximately $805 million. Polaris also expects that
approximately $100 million NPV of future net tax benefits will accrue to
the combined Company. When adjusted for the net tax benefit of $100
million, the transaction is valued at approximately $705 million. The
2017 Boat Holdings EBITDA multiple including the expected net tax
benefits is approximately 9.5 times. The transaction is expected to
close in the third quarter of 2018 and is subject to customary closing
conditions.
Boat Holdings is the largest manufacturer of pontoon boats in the U.S.,
one of the largest and fastest growing segments in the marine industry.
With a full offering of pontoon, deck and cruiser boats, Boat Holdings’
four recognized brands – Bennington, Godfrey, Hurricane and Rinker – are
strategically positioned with over 200 base models across a range of
price points and fully-custom built options. Boat Holdings leverages an
asset-light manufacturing model, and offers boats through a robust
network of dealers primarily in the United States and Canada. In 2017,
Boat Holdings generated approximately $560 million in sales.
“Boat Holdings is renowned for innovation and quality and we are excited
to have them become part of our portfolio of industry-leading
powersports vehicles. This transaction epitomizes our disciplined growth
strategy of entering attractive markets where we can establish and
extend our leadership position. In addition to market share leadership,
Boat Holdings expands Polaris’ footprint in the recreational outdoors
market, commanding more of consumers’ discretionary spending. Our
product lineup will offer options to be enjoyed on the roads, trails,
sand, dirt, snow and water,” said Polaris Chairman and Chief Executive
Officer Scott W. Wine. “With their passion to create premium products
and experiences, Boat Holdings is a strong cultural fit with Polaris as
well, sharing our commitment to quality, innovation, safety, flexibility
and efficiency. Further, Boat Holdings’ long-term relationships with its
national dealer network speaks to the brand’s strength with both dealers
and consumers.”
“Over the past 20 years, Boat Holdings has established premier brands
synonymous with innovation and quality through its broad portfolio of
boats, unmatched dealer network and commitment to our customers. With
similar cultures, both businesses share the same passion for product and
people, which has driven both our and their long-term success. As
a trailblazer in its own right, Polaris is the perfect partner as we
look to drive continued expansion and growth in this attractive
segment,” said Boat Holdings Chairman Steve Vogel.
Wine concluded: “We look forward to Boat Holdings’ best-in-class
management team and skilled and experienced workforce joining the
Polaris family. Together, we believe we can increase shareholder value
driven by ongoing innovation and growth, as we further leverage their
unique position within the large and growing boating industry.”
Strategic and Financial Benefits
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Establishes an Immediate Leadership Position in a New Category for
Polaris: Boat Holdings is currently the number one manufacturer of
pontoon boats in the United States. Its brand portfolio also includes
deck boats and cruiser options through its Hurricane and Rinker
brands, respectively. In a highly fragmented market, Boat Holdings’
extensive, experienced and loyal network of approximately 500 active
dealers is a competitive advantage, helping to generate steady demand.
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Expands Polaris Footprint of Outdoor Product Offerings: The
move into the recreational marine market expands Polaris’ already
recognizable presence in the overall outdoor powersports space.
Through this acquisition, Polaris will be able to offer customers a
range of motor-powered options to help consumers enjoy the great
outdoors on land or in the water. More so, customer demographics
across the off-road vehicle and boating segments are similar, with
approximately 30 percent of Polaris customers owning a boat. Polaris
expects that these cross-selling opportunities will increase sales and
provide additional value to shareholders.
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Adds an Additional Avenue for Growth in an Attractive Market:
The addition of Boat Holdings and its brands will broaden and
diversify Polaris’ range of powersports offerings, and Polaris expects
that it will boost its overall growth rate. The U.S. market for new
powerboats is an $8 billion market, and pontoon is one of the largest
and fastest growing segment within the industry – consistently
outgrowing the rest of the powerboat market. Sales in the pontoon boat
category have grown at an 11-percent compounded annual growth rate
(CAGR) since 2010, while Boat Holdings’ leading pontoon brands,
Bennington and Godfrey, have grown at an even faster pace over the
same time period. Polaris expects that this acquisition offers Polaris
a unique opportunity to meaningfully increase its addressable market
and growth profile.
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Boat Holdings is Revolutionizing the Industry: With deep
understanding and clear focus on the market and customers, Boat
Holdings has been at the forefront of a shift towards high-featured,
high-performance luxury boats, across price points. Over the years,
the company has revolutionized the industry through innovation in
lighting, handling, speed, performance and quality. Boat Holdings
remains focused on next generation innovation in both styling and
performance in order to maintain its cadence of new product
development that meet the evolving needs and wants of its customers.
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Offers Compelling Return Profile: The transaction is expected
to be immediately accretive to Polaris’ earnings, and approximately
$100 million of present value future tax benefits are expected to
drive additional cash flow accretion. Further, Boat Holdings’
differentiated operating model enables fast, flexible production with
low fixed assets and capital spending, leading to strong margins and
naturally high free cash flow conversion.
Following the closing of the transaction, Boat Holdings will operate as
a distinct business unit reporting to Bob Mack, president of Global
Adjacent Markets and senior vice president of Corporate Development and
Strategy at Polaris. Boat Holdings will maintain its headquarters and
manufacturing facilities in Elkhart, Indiana.
Transaction Timeline
The transaction, which has been approved by the Polaris Board of
Directors, is subject to the satisfaction of customary closing
conditions, including regulatory approvals, and is expected to close by
the third quarter of 2018.
Advisors
Goldman Sachs & Co. LLC acted as financial advisor to Polaris; and
Simpson, Thacher & Bartlett LLP acted as Polaris’ legal advisor.
Stephens Inc. acted as Boat Holdings’ financial advisor and Jones Day
acted as legal advisor to Boat Holdings.
Call and Webcast information
Today at 8:00 am (CDT), Polaris Industries Inc. will host a conference
call and webcast to further discuss the Boat Holdings LLC acquisition.
The call will be hosted by Scott Wine, chairman and CEO; Mike Speetzen,
executive vice president, Finance and CFO; and Bob Mack, president of
Global Adjacent Markets, and 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 877-883-0383 in the
U.S., or 412-902-6506 internationally. The Conference ID is #7371978.
A replay of the conference call will be available after the call for a
one-week period by accessing the same link on our website.
About Polaris
Polaris Industries Inc. (NYSE: PII) is a global powersports leader that
has been fueling the passion of riders, workers and outdoor enthusiasts
for more than 60 years. With annual 2017 sales of $5.4 billion, Polaris’
innovative, high-quality product line-up includes the RANGER®, RZR® and
Polaris GENERAL™ side-by-side off-road vehicles; the Sportsman® and
Polaris ACE® all-terrain off-road vehicles; 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, along with a
growing aftermarket portfolio, including Transamerican Auto Parts.
Polaris’ presence in adjacent markets globally include military and
commercial off-road vehicles, quadricycles, and electric vehicles.
Proudly headquartered in Minnesota, Polaris serves more than 100
countries across the globe. Visit www.polaris.com
for more information.
About Boat Holdings, LLC
Based in Elkhart, Indiana, Boat Holdings, LLC is a privately held boat
company founded in 1997, among whose shareholders includes Balmoral
Funds, a private equity firm based in Los Angeles, California. The
company, through its subsidiaries, manufacturers industry-leading boats
under the brands Bennington®,
Godfrey
Pontoon Boats®, Hurricane
and Rinker®.
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 Boat Holdings 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 Polaris; 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 any anticipated synergies or any benefits of the transaction
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, suppliers or dealers; 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 Polaris with the
Securities and Exchange Commission. Polaris does not undertake
any duty to any person to provide updates to its forward-looking
statements.
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Source: Polaris Industries Inc.