The Recreation Vehicle Industry Association commissioned an Economic Impact Study on the RV industry, released on June 7, 2016. The study found that the RV industry contributes about $49.7 billion in economic output or 0.28 percent of the Gross Domestic Product. Through its production and distribution linkages, the industry impacts firms in 426 of the 440 sectors of the United States economy.
Nationwide, the industry is responsible for 216,170 jobs, both directly and inderectly, creating an economic impact of $37.5 billion. The full study results, along with each individual state and congressional district's economic impact is available on the website by clicking here .
Mon Oct 3, 2016
FOREST CITY, IOWA, – Winnebago Industries, Inc has announced that it has entered into a definitive agreement to acquire Grand Design Recreational Vehicle Company for approximately $500 million in cash and newly issued Winnebago shares, to be closed in the middle of November.
Founded in 2012 by Don Clark, Ron Fenech and Bill Fenech, a management team with more than 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 2016, representing a compound annual growth rate of more than 80 percent since 2013, and a top tier EBITDA margin of 14 percent. Grand Design is a portfolio company of global growth equity investor Summit Partners.
Winnebago President and CEO Michael Happe and Grand Design CEO Don Clark say the talks about the acquisition were continuing for a couple of months.
“We were looking for a long-term partner to really replace a private equity partner that we had and there was a clock ticking on it,” Clark says. “But we were looking for a longer term partner to help support our growth.”
Once the companies merge in November by the end of Winnebago’s first fiscal quarter of 2017, the two manufacturers will continue to operate under the entity names, with Grand Design operating as a subsidiary of Winnebago. Clark will continue his position as president, while also serving as a vice president of Winnebago.
“We will have an integration team that is helpful to both sides,” Happe says. “We’re not going to pretend that nothing will change. We will be opportunistic and aggressive in looking for synergies and share best practices. It’s a merger of talent, which we’re excited about. Don will be a vice president at Winnebago and will no doubt contribute materially to Winnebago and contribute ideas in how we can be more successful. We will evolve over time. We are committed to maintaining that secret sauce that Don and his team have refined over the past four years.”
Clark says that he had always had respect for Winnebago and says that joining the company through acquisition was a simple choice.
“Winnebago is an iconic brand that is about as well known in our industry as Kleenex was to tissues,” Clark says. “Oftentimes, you go to an RV show and you hear people say ‘I’m going to look at a a Winnebago.’ It’s synonymous with motorhomes. And then meeting Mike Happe - his enthusiasm for the business is contagious and it was apparent that he was a competitive individual and one that we believe will shake the bushes in the industry and make some headway within their organization.
“Then when you look at the deep-seeded culture in the industry- - they have a reputation for building quality products and have a deep-seeded relationship with their dealers and great customer service. That speaks volumes to us because in our core business model, we have more similarities with Winnebago than with any other companies.”
The acquisition is expected to be immediately accretive to Winnebago’s growth profile, profit margins and earnings per share, excluding transaction costs and before giving effect to anticipated synergies.
The combined company will have about $1.4 billion in pro forma revenue along with a broader and more balanced portfolio well-positioned to deliver growth, improved profitability and value.
The $500 million purchase price includes tax assets valued at more than $75 million. After adjusting for the value of the tax assets, the purchase price implies a multiple of 7.1x Grand Design’s last 12 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 about 2.5x, inclusive of anticipated annual run rate synergies.
Immediately following the transaction, Grand Design shareholders will own about 14.5 percent of Winnebago shares outstanding.