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Old 07-01-2016, 09:10 AM   #1
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TMC Buys Jayco for $576 Million in Cash


ELKHART, IN — 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,” said spokesperson Tyler Deur. “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, said Deur.

“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,” he explained.

“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, Home - Thor Industries, Inc., which can be accessed by clicking on the “Acquisition of Jayco” tab available at 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
RV D@aily Report; Greg Gerber, Editor
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Old 07-01-2016, 11:08 PM   #2
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Wish I had bought stock on the 27th.

I also think there is an important distinction between Thor Industries and Thor Motor Coach.
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Old 07-20-2016, 04:01 PM   #3
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Jayco has always produced a quality product! Hope the new owner continues?

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Old 07-21-2016, 02:00 PM   #4
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Quote:
Originally Posted by Stano View Post
Jayco has always produced a quality product! Hope the new owner continues?
Recent press states that the management team has not changed and THOR is going to have a hands off strategy. THOR states why mess with a success story?
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Old 08-18-2016, 03:30 AM   #5
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My van is a starcraft conversion, I'm pretty sure they are owned by Jayco!
Thor is quickly becoming a monster in the space, I think they own Airstream already!!
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Old 08-18-2016, 08:08 AM   #6
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I think they own Airstream already!!
THOR has owned Airstream for a number of years already.
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Old 09-10-2016, 04:13 PM   #7
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This is going to be interesting because Thor has had a lot of bad criticism on several RV forums. Their coaches have been bashed a lot in this forum and RV.NET. While Entegra which is a Jayco coach has been mentioned as one of the best.

I am wondering what these bashers will do next.
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Old 11-19-2016, 05:49 PM   #8
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Thor-Winnebago

I was looking at new motorhomes yesterday at two different dealers. The salesman at both said Thor is buying Winnebago. Anybody hear of this, or is it just some more salesman's BS?
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Old 11-19-2016, 05:57 PM   #9
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Interesting - WGO recently purchased Country Coach. Anything is possible if the money is sufficient.
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Old 11-19-2016, 06:03 PM   #10
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Winnebago is a publicly traded corporation, I wouldn't buy from a dealer making false statements.
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Old 11-19-2016, 06:18 PM   #11
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Hands Off!

Check the new management at Thor/Jayco/Entegra. The hands stayed off just over 90 days! Jayco/Entegra has "eliminated" Tadd Jenkins forcing him to resign, replacing the "cornerstone" of the Entegra line with one of Thor's own former managers. New warranty set to begin 2017. Thrilling! So much for hands off. Bummer!

I just recently inspected a new 2017 Cornerstone, what a great coach. Too bad, if my personal investments improve and they were, I was looking at upgrading to the Entegra line next year. Guess "old Betsy'" just going to keep on keepin on. I'll certainly wait till this poker hand is played out.
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Old 11-20-2016, 10:57 AM   #12
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IMO personalities play a large part of most corporations. It may be entirely possible the leaving of Tadd is just what it is. One wonders though what is happening as it was reported in another thread that the Bontragers made the move or accepted the resignation.

A good friend of ours is an accountant. Her philosophy is "follow the money" and you will find the rationale.
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Old 11-20-2016, 01:17 PM   #13
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M&A's always keep the acquired senior management team in place during the transition to minimize the loss of middle management. Once things settle down it's understandable for the acquiring company to move it's management team in place, people they are familiar with, understand the culture and have proven performance results for the acquiring company.

It's very hard ot near impossible to have any brand loyalty other than maybe Newell amd Prevost.
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Old 11-21-2016, 07:48 AM   #14
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Most everyone follows a similar business plan as you've described Gdawgs. I've seen it many times in my corporate careers. However, Tadd Jenkins was "the" problem solver and confirmed as such by the vast majority of Entegra motorhome owners. They credit Jenkins hands on management style at Entegra preventing Jayco/Entegra from becoming another high price point mid quality DP manufacturer. Just examine the poor quality 2014, 2015 production issues where Jenkins returned out of necessity. Brand loyalty, one only needs to read the owners forum @IRV2 to understand Entegra is developing a similar following in a few short years similar to say "Airstream". Why, a very good quality coach at an attractive price. The DP market is miniscule, repeat business and brand loyalty IMO is imperative to success in the high end market. Removing the key that unlocks the treasure chest most times creates a vacuum usually that can damage beyond repair success.
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