Winnebago Revenue Up Towables, Buying Grand Design for $500 Million
04 October 2016 - 1:00AM
Dow Jones News
Winnebago Industries Inc. is buying fast-growing startup Grand
Design Recreational Vehicles Co. for $500 million in a move to
expand in the tow-along recreational vehicle market.
The company also said that preliminary results for the fourth
quarter came in above Wall Street expectations. Shares rose 5.6% to
$24.90 in premarket trading.
Winnebago primarily makes self-powered, motorized RVs, which,
while pricier than towables, are typically larger and offer more
amenities. The towable market has grown in recent years as they are
generally less costly and offer more flexibility, though they do
require a vehicle to drive them.
Grand Design was founded in 2012 by three former executives of
RV maker Thor Industries Inc., who set up shop in Middlebury, Ind.,
and quickly grew its revenue from $85 million in 2013 to $428
million in the last 12 months from August. It now represents 9.1%
of the towable fifth-wheel market share.
Towables currently account for 9% of Winnebago's revenue, which
will rise to 37% once the deal closes.
The $395 million in cash and $105 million in newly issued
Winnebago shares deal is a large purchase for Winnebago, which had
a market cap of about $637.7 million Friday.
For the fourth quarter, Winnebago said it now expects revenue of
$263.3 million and earnings per share of 49 cents. Analysts polled
by Thomson Reuters had expected earnings per share of 45 cents on
revenue of $249 million.
Included in the profit figure are 1 cent of expenses related to
the deal.
Grand Design is currently a portfolio company of private-equity
firm Summit Partners, which made its investment in 2014.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
October 03, 2016 09:45 ET (13:45 GMT)
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