Colmar, Pennsylvania-based Dorman Products, Inc. (NASDAQ:DORM), a leading supplier in the motor vehicle aftermarket industry, announced that it has entered into a definitive agreement to acquire Super ATV, LLC, for $490 million in cash at closing, plus an earn- out of up to $100 million in the aggregate payable over a two-year period subject to certain performance targets being achieved in 2023 and 2024.
When adjusted for approximately $45 million present value of estimated tax benefits, the transaction value before earn-out is $445 million. The transaction is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in the second half of 2022.
SuperATV generated $211 million in net sales in fiscal 2021. Dorman expects the acquisition of SuperATV to be immediately accretive to margins and adjusted EPS, excluding one-time charges and acquisition-related intangible assets amortization. Additionally, Dorman anticipates significant opportunities to catalyze incremental growth via new product innovation.
The combined company is expected to be a best-in-class powersports aftermarket platform with vertically integrated development, manufacturing and fulfillment capabilities. SuperATV’s omni-channel approach, which combines a leading direct-to-consumer platform and relationships across a network of 3,500+ dealers and installers, enables customers to have access to the products they need wherever and whenever they choose to shop. SuperATV’s recognized reputation for quality and innovation has cultivated a passionate and loyal customer base within the powersports community.
“This combination aligns with our strategy to diversify our customer base and product offering by providing a compelling entry point to the large and rapidly growing powersports industry,” said Kevin Olsen, Dorman’s president and CEO. “Not only is SuperATV a leader in their space with an extensive portfolio of widely recognized brands and proprietary products, but they also have a highly successful approach to new product innovation that aligns closely with Dorman’s business model. As a result, we are conﬁdent we can leverage Dorman’s playbook to further accelerate growth. We are excited to welcome SuperATV to the Dorman family and are excited about the value the combined company will generate for our customers and shareholders.”
“The combination of Dorman and SuperATV is extremely exciting,” said Lindsay Hunt, SuperATV president and CEO. “The resources and expertise that Dorman provides will allow us to accelerate our growth and expand to our fullest potential by delivering an even better experience and more products that our customers love. We look forward to becoming part of the Dorman family upon the successful completion of the transaction.”
In connection with the transaction, Dorman expects to obtain a $500 million incremental credit facility under the terms of its existing credit agreement, resulting in net leverage of less than 2.3x. The cash flow generation of the combined company is expected to provide Dorman with flexibility to continue executing on its strategic priorities. Until the transaction closes, both companies will operate independently.