THIEF RIVER FALLS, Minn. - Its Minnesota roots are nearly six decades deep, but Arctic Cat now has new owners, saying it's selling for the first time since its Thief River Falls launch in 1960.
“The roots are still there, and Minnesotans will always be snow people, so I think that will always be part of the equation,” said David Berg, Associate Professor at Hamline University’s School of Business.
But sales did not add up the last few years for Arctic Cat, which struggled to move the snowmobiles and ATVs it's known for. With its $247 million sale to Rhode Island based Textron, analysts say it may be more competitive, joining a 35,000 employee company already making things like airplanes, helicopters and golf carts.
“Putting them under the same corporate umbrella--the same corporate ownership--may allow them to operate better together than they would operate separately,” Berg said.
But the merger also leaves a lot of uncertainty, especially for the 1,600 workers at Arctic Cat's plants in Thief River Falls and St Cloud, and at its headquarters in Minneapolis. In a statement today, its CEO Chris Metz says he expects "expanded opportunities" for employees. But experts say mergers almost always bring surprises.
“You can't predict that, I can't predict that, they can't predict how exactly things are going to play out,” Berg said.
One thing already clear: investors could win big. Arctic Cat stock today jumped more than 40 percent.
In a press release Arctic Cat's president and chief executive officer said “Arctic Cat’s board believes that Textron’s offer delivers compelling and immediate value to our shareholders. 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. The company is preparing a tender offer to purchase all outstanding shares of Arctic Cat at $18.50 per share in cash, representing a 40.7 percent premium to the closing price of Arctic Cat's common stock on January 20, 2017.
The completion of the acquisition is subject to customary conditions and regulatory approvals.
Company officials say Arctic Cat and Textron Specialized Vehicles have complementary product portfolios of recreational, utility and specialized vehicles. They believe the combined businesses will be a power sports industry leader with a wider product line-up, and allow for "more aggressive investment in product development, dealer networks, marketing and customer service."