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Thor buys Jayco for $576 million

Thor buys Jayco for $576 million

ELKHART — Thor Industries today announced the acquisition of Jayco for approximately $576 million in cash.

This transaction represents a unique and significant opportunity to enhance the growth of Thor and advance the company’s strategic focus on growing its RV business, the release noted. In particular, Jayco brings complementary products in travel trailers, folding camping trailers, higher-end diesel Class A motorhomes and larger Class C motorhomes.

Jayco will be a wholly owned subsidiary of Thor, and the existing senior management team will continue to lead the business.

“We are thrilled to welcome Jayco to the Thor portfolio of companies,” said Bob Martin, Thor president and CEO.  “Jayco is a company that I have admired for more than 20 years while working in the industry and living in the community very close to their operations.

“We value the longstanding success of Jayco and are committed to providing the Bontrager family, and their team of dedicated employees, the resources they need to continue the success they have built at Jayco over the past half century,” he added.

“This investment also illustrates our confidence in the future of the RV industry as younger consumers enter and expand the market over the coming decades,” Martin explained. “Both existing and new RVers will see the benefits of our subsidiaries’ efforts as they lead in innovation with new technology and features in our products that make RVs easier to use and better connected.”

Wilbur Bontrager, chairman of the board of Jayco, said, “Our family is very proud of the legacy we have established and nurtured over the past 48 years.  As a family run and owned business, we view today’s transaction as an opportunity to continue growing our business while joining an even larger family.”

Derald Bontrager, president and CEO of Jayco, added, “The core values that are synonymous with Jayco and its brands shape the way we run our business, and these values will remain and guide us as we look to the future.

“One of the things we found most attractive about Thor was their decentralized business structure, which allows their subsidiaries to continue operating independently,” he explained. “Most importantly, within this structure, our current leadership team will continue to manage Jayco, just as we have been running it since our founding.

“We will continue with the same focus our father had on serving our dealers and consumers better than anyone else in the industry,” he said.

Transaction highlights

The transaction is a positive, strategic fit for both companies, said Deur.  Jayco brings a lineup of innovative products into the Thor family, across multiple product categories.  In particular, Jayco’s travel trailers, camping trailers, high-end diesel motorhomes and super C motorhomes will enhance and complement the existing Thor family of products, he explained.

Jayco includes strong subsidiaries such as Jayco, Starcraft RV, Highland Ridge and Entegra Coach, including brands like the Jay Flight, the No. 1 selling travel trailer for the past 11 years.

Purchase price of approximately $576 million in cash, is subject to post-closing adjustments.  The purchase price was funded through existing cash balances as well as approximately $360 million in borrowings from an asset-based revolving line of credit arranged through the company’s lenders.

The company plans to repay the loan through internally generated cash flow and anticipates that it will be repaid within three years of closing.

The purchase agreement was executed and effective June 30.

Jayco generated income before tax of approximately $70 million on revenue of approximately $1.5 billion in calendar year 2015.

Thor has decided to make the election provided in Section 338(h)(10) of the tax code that will enable the company to deduct for tax purposes the difference between the purchase price and the tax basis of the net assets acquired over a 15-year period.

Thor expects the purchase to add one month of Jayco revenue in the fourth quarter of fiscal 2016.  The company also expects to incur various charges associated with the acquisition in the fourth quarter including professional fees, debt-related fees and purchase accounting expenses and charges. As a result the net impact on fourth-quarter and full-year income is not expected to be material.

Jayco, and its subsidiaries Jayco, Starcraft RV, Highland Ridge and Entegra Coach currently operate in 31 facilities which include 17 production lines covering 2.2 million square feet of production space located primarily in Northern Indiana with additional facilities in Twin Falls, Idaho.

Thor will operate Jayco as an independent company as it does with its other subsidiaries, the release explained, adding that it will be “business as usual” at Jayco as their existing, experienced management team will continue to manage their operations and compete effectively in the RV market, just as they and their family have done for the past 48 years.

“Jayco has a well-deserved reputation of providing their dealers and retail consumers with the RVs and service they demand and the value they deserve,” said Martin. “That product innovation and dedication to their dealers and retail consumers will continue, without interruption, through the support of Thor as we continue to focus on growing our business in the North American market.

“We are excited by what we can bring to Jayco and by what they can bring to us to deliver exceptional product quality and an outstanding customer experience that will benefit everyone involved in the RV lifestyle,” he explained.

Peter B. Orthwein, Thor Executive chairman, said, “Throughout our history, Thor has endeavored to buy successful companies with strong management teams that can benefit from Thor’s financial strength and resources in order to drive future growth.

“The acquisition of Jayco furthers this strategy and allows Jayco to continue its history of success by offering a strong portfolio of products and services to the market, resulting in enhanced competitiveness within the industry,” he explained.

“As our decentralized structure has proven for more than 30 years, we believe the best path to success is through competition,” Orthwein added. “We are confident that Jayco will continue to compete effectively in the market just as they have over the past 48 years in the same manner that all Thor subsidiaries compete today among themselves and with other outside companies.”

Supplemental investor materials

Thor has provided supplemental information on the transaction in the investor relations section of the company’s website, www.thorindustries.com, which can be accessed by clicking on the “Acquisition of Jayco” tab available at t ir.thorindustries.com/acquisition-of-jayco.

Included under this tab are a presentation deck and deal fact sheet outlining the highlights of the transaction as well as a list of likely questions and answers about the transaction.

SOURCE: Thor Industries press release

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About Greg Gerber

Greg Gerber is a freelance writer and podcaster who has been writing about the RV industry since 2000. He is the former editor of RV Daily Report and can be reached at greg@rvdailyreport.com.

5 comments

  1. Running an rv park, I see the Jayco and Thor products come in all the time. Owners tell me both brands are crap and don’t hold together. I would never own either brand myself.
    I guess they sucker the new to rving buyer in.

    • Belinda Pittman

      We bought a 2012 Jayco HT – 30 ft brand new. We loved it but it was too small for the extended stays we normally do (between 4-6 months at a time). It had Amish cabinetry which was wonderful and REAL wood. We sold it and bought a new 2013 Heartland Landmark – 41 ft with 3 slides (LUXURY FIFTH). It gives us all the room we need and it serves our extended stays. Problem is, we paid over 3 times as much for the Landmark! Its interior is built with a pressed-board type wood. First time water hits it to any degree it swells up and does NOT return to its normal size! Makes an ugly appearance. Also, have replace 1 landing gear, 1 stabilizer, the hot water tank valve (apparently installed with crossed threads) broke and flooded the storage area, the ceiling fan is useless, convection/microwave does not work properly, inside water lines were installed in reverse (hot to cold/cold to hot), kitchen faucet will not stay in place (moved it and it almost fell out of counter from bad connections underneath), etc. One would think the more you pay the better the product…..BEWARE this is NOT the norm. Wish I had a ‘longer/bigger’ Jayco…..

  2. We have had some really great travels in our 2009 35 RLTS Jayco Designer. Any time we had a problem, Jayco stood behind their product. We have no trailer envy, 5th wheel or bumper pull.

  3. Let’s see how long the KZ and Jayco 2 year warranties last…

  4. Just love the way the Government doesn’t do anything about monopolies in the RV industry. Thor buying another manu. out or LKQ buying Keystone which bought out NTP, then they bought Stag Parkway then Coast Dist. How bad does this industry have to get before our fine government does anything about monopolies in this industry?

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