Winnebago Industries to Purchase Grand Design
Winnebago Industries Inc. today (Oct. 3) announced that it has entered into a definitive agreement to acquire towable manufacturer Grand Design Recreational Vehicle Co. for approximately $500 million in cash and newly issued Winnebago shares.
Founded in 2012 by Don Clark, Ron Fenech and Bill Fenech, a management team with over 80 years of combined leadership experience in the RV industry, Grand Design is a fast-growing manufacturer in the towables segment with rapidly expanding market share. The company generated $428 million in revenue over the last 12 months ending August of 2016, representing a compound annual growth rate of over 80% since 2013, and a top tier EBITDA margin of 14%. Grand Design is a portfolio company of global growth equity investor Summit Partners.
The acquisition is expected to be immediately accretive to Winnebago’s growth profile, profit margins and earnings per share (EPS), excluding transaction costs and before giving effect to anticipated synergies. The transaction is expected to close by the end of Winnebago’s first fiscal quarter of 2017, subject to regulatory approvals and other customary closing conditions.
Happe continued, “I look forward to working closely with Don, along with the rest of the Grand Design team. With a shared focus on quality products, dealer relationships and customer service and satisfaction, together we will be even better positioned to serve dealers and customers well into the future.”“Grand Design has built a tremendous reputation and position in our industry by delivering quality products and high levels of customer satisfaction, and we are excited to welcome them to the Winnebago family,” said Michael Happe, Winnebago president and CEO. “Grand Design’s differentiated and nimble approach to serving today’s towable consumer, proven ability to deliver exciting new products and deep industry expertise complement our existing capabilities and Winnebago’s iconic brand. The addition of Grand Design will accelerate our expansion in the towables business, creating a broader and more balanced portfolio well-positioned to capitalize on the opportunities across the RV market and to drive improved profitability and long-term value for stakeholders.”
Clark, co-founder and CEO of Grand Design, commented, “This is an exciting day for Grand Design and reflects the hard work and dedication of everyone involved in our rapid growth and success over the past several years — the Grand Design team, our valued customers and our investors. We have incredible respect for Winnebago and are honored to join an iconic company that shares our dealer-centric, customer-focused culture. This shared foundation makes our two companies an ideal fit, and we look forward to maintaining our unique identity as an agile competitor as we leverage Winnebago’s strong platform to broaden Grand Design’s reach and deliver the best possible product and service to our dealers and our customers.”
“We are proud to have partnered with Don and the entire Grand Design team and congratulate them on the exciting new partnership with Winnebago,” said Jay Pauley, a Principal at Summit Partners.
Grand Design will operate as a distinct business unit within Winnebago with headquarters remaining in Middlebury, Ind., and its portfolio of brands will remain in place.Clark will continue to lead the Grand Design towables business post-closing as its president. He will also serve as a vice president for Winnebago and be a member of the executive leadership team.
Transaction highlights include:
• The combined company will have approximately $1.4 billion in pro forma revenue along with a broader and more balanced portfolio well-positioned to deliver growth, improved profitability and value.
• Annual run-rate cost synergies are anticipated to be $7 million, phased in over three years, to be achieved through identified opportunities in purchasing and the elimination of redundant processes with additional upside potential from sharing of manufacturing best practices.
• The $500 million purchase price includes tax assets valued at over $75 million. After adjusting for the value of the tax assets, the purchase price implies a multiple of 7.1x Grand Design’s last twelve months EBITDA of $60 million.
• Winnebago expects to fund the transaction through a combination of $395 million in cash and $105 million in newly issued Winnebago shares. J.P. Morgan has agreed to provide committed financing for the transaction. Upon closing, Winnebago expects to have a debt to EBITDA ratio of approximately 2.5x, inclusive of anticipated annual run rate synergies.
• The combined company is expected to generate significant cash flow that will facilitate rapid debt reduction. Winnebago expects to reduce its debt to EBITDA ratio to below 1.5x by the end of fiscal 2018.
• Immediately following the transaction, Grand Design shareholders will own approximately 14.5% of Winnebago shares outstanding.
Kan.-Based Supplier Airxcel Acquires Dicor Corp.
Elkhart, Ind.-based Dicor and its affiliates are well known for providing innovative RV roofing systems, wheel componentry, window shades, FRP, composite paneling, window sealing as well as a wide array of aftermarket care and repair products. Wichita, Kan.-based Airxcel Inc. announced today (Oct. 1) that it has acquired Dicor Corp. Dicor has been a leading RV industry supplier for over 32 years , and boasts a collection of affiliate brands that include Dicor Products, United Shade, Vixen Composites and Seal Design.
“The Airxcel management team has a deep level of respect for Dicor, its products, heritage and dedication to customer service. We are pleased to welcome Dicor and its talented team into Airxcel,” said Jeff Rutherford, Airxcel President and CEO.
“I am so excited to be part of the Airxcel family,” said Gary Adamson, CEO of Dicor. “The synergy created between these two companies will be amazing. Their reputation for service and quality as well as the outstanding individuals who there will make this partnership a significant plus in the marketplace.”“The Dicor team is looking forward to joining the Airxcel family. We have long been an admirer of Airxcel’s leading product initiatives and their culture of excellence. Being associated with Airxcel will allow each entity to benefit from the other’s key competencies and drive higher levels of customer satisfaction,” stated Gregg Fore, Dicor president.
Winnebago Industries, Inc (Winnebago) is recalling certain model year 2016 Winnebago Journey and Forza, and 2016 Itasca Solei and Meridian motor homes manufactured May 7, 2015, to March 25, 2016. In the affected vehicles, the front sway bar mounting brackets may not fit properly on the axle causing the mounting bolts to bend or loosen.
If the sway bar bolts loosen, the sway bar may detach from the axle, affecting the handling and increasing the risk of a crash.
Winnebago owners will be notified by Daimler Trucks North America (DTNA) and DTNSA will modify the sway bar mounting, free of charge. The recall began on June 7, 2016. Owners may contact DTNA at 1-800-547-0712.
Daimler Trucks North America, LLC (DTNA) is recalling certain model year 2016-2017 Freightliner Custom Chassis (FCCC) S2 chassis and Freightliner Business Class M2 trucks and non-school buses manufactured March 2, 2015, to September 8, 2016, equipped with ICU3s instrument clusters and hydraulic brakes. In the event of a brake malfunction, these clusters may illuminate the Brake System Malfunction telltale/indicator lamp with the word "PARK" instead of the word "BRAKE". As such, these vehicles fail to comply with the requirements of Federal Motor Vehicle Safety Standard (FMVSS) number 101, "Control and Displays," and number 105, "Hydraulic and Electric Brake Systems."
If "PARK" illuminates instead of the word "BRAKE," the driver will be unaware of a braking issue or malfunction, increasing the risk of a crash.
DTNA will notify owners, and dealers will replace the ICU3s instrument clusters with new clusters, free of charge. The recall is expected to begin November 11, 2016. Owners may contact DTNA customer service at 1-800-547-0712. DTNA's number for this recall is FL-724.
Starcraft RV (Starcraft) is recalling certain model year 2017 AR-ONE MAXX LE trailers, model 19BHLE, manufactured August 25, 2016, to September 6, 2016. The Federal label on the affected vehicles states that the trailers are built with two axles, each with a 2500 pound capacity, however, the vehicles are only built with one 2500 pound capacity axle. As such, these vehicles fail to comply with the requirements of 49 CFR Part 567, "Certification."
The trailer would be overloaded if the operator goes by the listed axle capacity, possibly resulting in axle or tire failure, thereby increasing the risk of a crash.
Starcraft has notified the dealers who have the trailers quarantined and will provide them with a corrected Federal label, free of charge. The recall began September 19, 2016. Owners may contact Starcraft customer service at 1-800-945-4787. Starcraft's number for this recall is 9902319.
Daimler Vans USA, LLC (DVUSA) is recalling certain model year 2016 Mercedes-Benz and Freightliner Sprinter 2500 and 3500 vehicles manufactured March 1, 2016, to May 31, 2016. The bolts connecting the lower seat belt connection to the rear bench seat may not have been properly tightened.
If the bolts were not properly tightened, the seat belt may fail to secure the seat occupant in the event of a crash.
DVUSA will notify owners, and Sprinter dealers will inspect the connecting bolts, tightening them as necessary, free of charge. The recall is expected to begin in October 2016. Owners may contact DVUSA customer service at 1-877-762-8267.
Jayco, Inc. (Jayco) is recalling certain 2017 Octane Super Lite travel trailers manufactured June 22, 2016, to June 23, 2016. The labels on the affected vehicles have incorrect tire load range and tire pressure information. As such, these vehicles fail to comply with the requirements of Federal Motor Vehicle Safety Standard (FMVSS) number 110, "Tire Selection and Rims."
Incorrect tire pressure information may result in the tires being over inflated, which can cause their sudden failure, increasing the risk of a crash.
Jayco has notified owners and provided them with a new label with the correct tire information, free of charge. The recall began on September 23, 2016. Owners may contact Jayco customer service at 1-800-283-8267. Jayco's number for this recall is 9901320.
Forest River, Inc. (Forest River) is recalling certain model year 2017 Salem and Wildwood recreational trailers manufactured August 9, 2016, to September 6, 2016. The Federal Placard on the affected vehicles incorrectly lists the tire and rim combination. The placard states ST225/75R15 Load Range C tires with an inflation pressure of 50PSI and a rim size of 15X6.0JJ, however, the trailer is equipped with ST225/75R15 Load Range D tires that have an inflation pressure of 65PSI, installed on 15X6.0JJ rims. As such, these vehicles fail to comply with the requirements of Federal Motor Vehicle Safety Standard (FMVSS) number 110, "Tire Selection and Rims."
The incorrect tire information on the Federal Label may result in the operator under-inflating the tires. An underinflated tire may cause sudden tire failure, or poor handling, increasing the risk of a crash.
Forest River will notify owners, and dealers will install a corrected Federal Placard, free of charge. The recall is expected to begin November 14, 2016. Salem owners may contact Forest River customer service at 1-574-534-1251. Wildwood owners may contact Forest River customer service at 1-574-533-2165. Forest River's number for this recall is 27-09082016-0243.
Tiffin Motorhomes, Inc. (Tiffin) is recalling certain model year 2015-2017 Allegro motorhomes manufactured April 1, 2015, to September 16, 2016. The affected vehicles have a tow hitch with a weight capacity sticker that may indicate an incorrect weight capacity.
If the hitch is loaded to the weight on sticker, the hitch may fail and the towed vehicle can separate from the motorhome, increasing the risk of a crash.
Tiffin will notify owners, and send them a corrected label to replace the incorrect label, free of charge. The manufacturer has not yet provided a notification schedule. Owners may contact Tiffin customer service at 1-256-356-8661. Tiffin's number for this recall is TIF-104.