Polaris selling Transamerican Auto Parts to Clearlake Capital-backed Wheel Pros

Polaris announced it has entered into a definitive agreement to sell its Transamerican Auto Parts (TAP) business to Wheel Pros, a designer, manufacturer and distributor of proprietary branded aftermarket vehicle enhancements for light trucks, SUVs, passenger cars and ATVs/UTVs backed by Clearlake Capital Group, L.P. (together with its affiliates, “Clearlake”) and in partnership with management.

The transaction includes TAP’s full portfolio of operations, including all brands, product lines, manufacturing operations, distribution facilities, more than 100 4 Wheel Parts retail locations and more than 1,700 TAP employees.

Powersports Business, magazine, dealership, brick and mortar,

“We have a clear vision to be the global leader in powersports,” said Polaris CEO Mike Speetzen. “Our decision to divest TAP better positions us to capitalize on growing consumer interest and demand for our powersports offerings, while enabling Polaris to focus our time, people and resources on our core On-road, Off-road and Marine businesses, along with the parts, garments and accessories brands that support those customers. In addition, it supports our long-term financial targets and is expected to have a positive impact on EBITDA margin. TAP remains a leading omni-channel player in the Jeep and truck aftermarket space, and we appreciate the contributions the team has made to Polaris.”

The transaction is estimated to drive $135 million of additional cash inflows for Polaris in the second half of 2022. This includes the purchase price from the buyer and realization of cash tax benefits related to the sale, minus estimated transaction fees. The sale price, net of cash, debt, and other costs is estimated at $50 million. In 2021, Polaris’ Aftermarket segment generated $930 million in revenue, of which the TAP business accounted for nearly $760 million. The transaction is expected to close early in the third quarter, subject to customary closing conditions.

In connection with entering into a definitive agreement to sell TAP, the TAP business has met the accounting criteria to be classified as assets held for sale and discontinued operations. In connection with the transaction, Polaris expects to record an impairment charge, net of tax, of approximately $140 million.

Baird acted as financial advisor and Jones Day acted as legal counsel to Polaris in connection with the transaction.