Thor Industries (THO) Acquires Jayco For $576 Million Cash
Zacks Investment Research | Jul 04, 2016 08:36AM ET
Thor Industries Inc. (NYSE:THO) has acquired Jayco Corp for around $576 million in an all-cash transaction. The acquisition is expected to help Thor Industries expand in the segments wherein Jayco specializes, including recreational vehicles (RVs), traveling and camping trailers, high-end diesel Class A and large Class C motorhomes. Jayco is now Thor Industries’ fully owned subsidiary and will operate independently under the current senior management team.
Thor Industries funded this acquisition with its cash balance along with a $360 million borrowing from an asset-based revolving line of credit. The debt is expected to be paid off within three years of completing the acquisition though Thor Industries’ internally generated cash flow. The company, on the other hand, acquired Jayco’s $115 million worth tangible net assets.
With its subsidiaries, Jayco, Starcraft RV, Highland Ridge and Entegra Coach, Jayco runs 31 facilities including 17 production lines with 2.2 million square feet of manufacturing space, and has over 850 dealers in North America. Thor Industries will not be assuming any additional long-term debt.
Jayco promises to be a strategic fit to Thor Industries’ values. A well-received and long-term industry player, it generated sales of $1.5 billion and income before tax of $70 million in 2015. However, Jayco’s 9.5% gross margin for 2015, compared to Thor Industries’ 13.9% in fiscal 2015, is expected to modestly dilute consolidated margins. Nonetheless, the company’s growth profile is similar to that of Thor Industries’ other subsidiaries and it is expected to perform well and grow fast in the future.
Following Thor Industries’ policy of letting its subsidiaries operate independently, Jayco will run under its current management and long-term owners. Thor Industries will provide the company with the necessary financial help and resources to continue providing the industry with innovative products.
Jayco, in return, will provide Thor Industries a larger presence in camping trailers and Jay Flight, the best travel trailer for over a decade. Over time, the acquisition is expected to help Thor Industries lower its overall cost and improve earnings.
Thor Industries expects to add one month of Jayco’s revenue to its fourth-quarter fiscal 2016 results. However, the company will be incurring certain legal and consultation expenses related to the deal in the quarter. Thor Industries is optimistic about the future of the RV industry and its expanding market.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.