Bad Boy also renamed Textron Off Road
Textron Inc. has been making inroads into the powersports industry since it acquired the Bad Boy brand of electric side-by-sides in 2010, but it took a larger leap into the industry on March 6, when the company completed its acquisition of Arctic Cat Inc.
The Arctic Cat Board of Directors unanimously approved the cash transaction valued at approximately $247 million, plus the assumption of existing debt. Textron, through its Textron Specialized Vehicles wholly owned subsidiary, offered to purchase all outstanding shares of Arctic Cat for $18.50 per share in cash, a 40.7 percent premium to the closing price of ACAT stock.
The move came after Arctic Cat reported four consecutive quarters of losses, including a net loss of $12.8 million, or $0.98 per share in the Sept. 30, 2016-ending second quarter of the company’s fiscal 2017.
Under the short-form merger, Arctic Cat will operate as a wholly owned subsidiary of Textron under Textron Specialized Vehicles Inc.
“We see this as just an excellent marriage between what we started here with Bad Boy and Textron Off Road and the E-Z-GO PTV (personal transportation vehicle) lineup, and they’ve got a fantastic powersports brand,” said John Collins, vice president — Consumer for Textron Specialized Vehicles. “They’ve got a very large distribution network. If you look at our distribution map, and their distribution map, they’re very strong in places where we’re weak, and we’re relatively strong where they’re weak. So that gives us geographic overlay that is beneficial for both companies.”
As a company that was built on snowmobiles first, Arctic Cat has a stronger presence in the snow belt, while Textron Specialized Vehicles, based in Augusta, Georgia, has a firmer grip on the South.
Textron Inc. is a $13.8 billion company with operations in more than 25 countries and about 35,000 employees. From 1968-81 it owned Arctic Cat’s Minnesota rival Polaris. Textron is now the company behind Bell Helicopter, Textron Aviation, Textron Systems and Textron Financial Corporation, as well as Textron Specialized Vehicles. Under the Textron Specialized Vehicles umbrella are brands Textron Off Road (formerly Bad Boy Off Road), E-Z-GO golf cars and personal transportation vehicles, Cushman commercial utility vehicles, Dixie Chopper zero-turn mowers, Jacobsen professional turf-care equipment, and Douglas, TUG, Premier and Safeaero ground support equipment.
“From a product standpoint, we’ve developed some great products like the Stampede and other vehicles that we have in the pipeline to come,” Collins told Powersports Business. “We’ve got an electric 4WD product that obviously they don’t have. We’ve got the E-Z-GO PTV, which has just done great with the powersports dealers. And they’ve got the vehicles like the Alterra, the Prowler and the Wildcat that we’re excited about, so if you look at channel distribution, product, brands, we don’t have snowmobiles — that’s something that was way, way far out in our product pipeline plans — but I think you really have some very good synergies to lay on top of each other with the Textron product and the Arctic Cat products coming together here. So that’s what we’re excited about and planning to take advantage of.”
Textron Off Road is born
While Textron was closing the Arctic Cat acquisition in early March, the company also announced that it is replacing the Bad Boy Off Road brand with Textron Off Road.
“The reason we’re doing that is Bad Boy, it’s been very good to us, and regionally, it’s been very strong, but it’s really had a hard time being more of a national brand,” Collins said. “When you think of Textron, Textron may not be a product or a brand that’s known to a lot of consumers, but when you go out and look up Textron and understand what it is we do and who we are, you’re talking about a company that develops the V-22, which is the helicopter that takes the warfighter to the places that you don’t want to go and takes them out when they’re through; the Citation line of planes by Cessna; the Ship-To-Shore Connector by Textron Marine & Land Systems. This is a company that has a very high level of engineering and technical prowess and just makes fantastic products, and we’re part of that family.”
Though Textron just announced last May the new Bad Boy Off Road name and logo, the company is changing direction with the name now that staff has had the opportunity to further explore the market and learn more about powersports consumers.
“As we went out there and we really started talking to customers in the powersports industry, users nationwide, and really dealers as well, it was very apparent that the power of Textron and the brand and the story resonated with dealers and customers,” Collins explained. “People really intuitively understood the level of commitment and expertise required to design, manufacture and support Textron’s high-performance, high-quality, reliable products, whether it’s a Beechcraft King Air 350, or Textron Systems Commando, that story resonated with those guys.”
He added, “We’re very proud of the Bad Boy brand, and it was popular in certain segments, but we just determined that drawing a direct association to Textron would more accurately reflect the level of design, precision engineering and manufacturing expertise that goes into our products — and not just the ones we have today, but what we’re working on as well — and we just think that that association to a very professional company that has that level of capability is good for consumers; it’s good for dealers; it’s good for our brand, and that’s the direction that we chose.”
As was presented at the Arctic Cat dealer meeting in late February in St. Paul, Minnesota, Textron Specialized Vehicles expects Arctic Cat, E-Z-GO and Textron Off Road to all be brands that dealerships can represent under one roof.
“I can see a dealer who has a sign outside that says both Textron Off Road and Arctic Cat. I could see a dealer that would have Textron Off Road, Arctic Cat and E-Z-GO, and that’s three very unique value propositions for a dealer and one point of contact, one company providing support, one company doing engineering, and I think that’s what we can visualize is those three brands being on the marquee of dealerships.”
Though Textron has recently transitioned away from the Bad Boy name, the Arctic Cat brand will stick around, Collins said, because Textron sees the value in the 56-year-old moniker.
“One of the things that we certainly love about Arctic Cat is their fiercely independent spirit. They’ve got such a passion around the brand and the products, and those consumers … they just bleed green, and we do not want to lose any of that. That’s something that we’re very committed to holding on to,” Collins reported. “Really the closest brand that I can really point at that has a similar cult following would be Harley guys; there are some guys for who it’s going to be a Harley, and I think Arctic Cat very much has built that same level of loyalty with a lot of their customers. So I think our financial backing, our combined manufacturing expertise and engineering prowess will come together for a very good marriage.”
He added, “We love the Arctic Cat brand. We’ve still got some work to understand what happens to Textron Off Road, what happens to the branding on their dirt products, what happens to snow. Certainly Arctic Cat will always be the snow brand, and we just have to figure out what the overlay is with Textron Off Road products, the Arctic Cat products and the snow products. We plan to continue a very consistent, very aggressive level of investing into Arctic Cat, into the combined brands, the combined products and really bring a value proposition to dealers that we weren’t able to do alone, so it just really makes a lot of sense when you just sit back and think about these two companies coming together.”