Longtime Minnesota snowmobile maker Arctic Cat sold for $247 million

Long-struggling Minneapolis-based Arctic Cat is being purchased by Textron Inc. for $247 million in cash, a consolidation coming at a time when sales of all-terrain vehicles and snowmobiles have been under pressure, company officials announced Wednesday.

The sale to Rhode Island-based Textron, a conglomerate whose products include helicopters and golf carts, follows extended turnaround efforts by the Minnesota company that failed to yield consistent profits or greatly excite consumers with new models.

Arctic Cat was founded in northern Minnesota in 1960 and employs about 1,600 people, mostly in a Thief River Falls, Minn., factory, an engine manufacturing plant in St. Cloud and at the company's new headquarters in the North Loop. Arctic Cat just moved into the new space in August, after the building's owner invested millions in renovations for Arctic Cat.

In announcing the sale to Textron, company officials said Arctic Cat's Minnesota facilities are largely expected to stay intact after the deal closes later this year.

"Arctic Cat's board believes that Textron's offer delivers compelling and immediate value to our shareholders," Arctic Cat CEO Christopher Metz said in a statement. "This transaction presents increased opportunities for the business to leverage our combined scale, accelerate growth and enhance product innovation in ways that will benefit our customers, dealers and employees."

Textron, with $13.8 billion in revenue, 35,000 employees and its own share of troubles meeting Wall Street's profit expectations, will pay $18.50 for each share of Arctic Cat, a 41 percent premium above the company's $13.13 stock price from earlier this week. The shares rose nearly 42 percent Wednesday to close at $18.55.

It is unclear if Metz intends to stay with Arctic Cat after the deal closes. When asked, a spokeswoman would only say: "We are not able to provide more information at this time."

Metz, a former Black and Decker executive and turnaround expert in the private-equity realm, joined Arctic Cat as CEO in December 2014 after years of management turbulence and poor financial performance. In two years, Metz focused aggressively on reducing dealer inventory, boosting promotions, new products and sponsoring more events in the sports racing world.

"We are proud of the progress our team has made to lay the foundation for Textron to continue taking this company forward," Metz said in a statement. "Textron plans to build on Arctic Cat's strong brand and history of innovation. We expect many Arctic Cat employees to benefit from expanded career opportunities as part of a larger, more diversified company."

Textron, which is better known for making golf carts and utility vehicles, is expected to make Arctic Cat part of its "specialized vehicles" business and maintain its current manufacturing, distribution and operational facilities, "with a focus on growing the business," Textron officials said in a statement about the deal. Arctic Cat reported in November that it suffered steep sales and profit declines amid a weakening power-sports market.

Sales fell 22 percent to $165 million for the fiscal second-quarter that ended Sept. 30. The company lost $12.8 million, or 98 cents a share, a reversal from a profit of $11 million in the same period a year ago.

The results included a $1.4 million charge from a product liability settlement.

Combined, Arctic Cat and Textron will offer many types of recreational, utility and specialized vehicles. By adding Arctic Cat to its lineup, Textron said it intends to more aggressively invest in product development, dealer networks, marketing and customer service. The completion of the acquisition is subject to customary conditions and regulatory approvals.

Textron released fourth-quarter sales and earnings results Wednesday that fell during the quarter, and which missed Wall Street expectations. Textron announced that it will take an $8 million pretax restructuring charge.

Textron Specialized Vehicles produces golf carts, utility and personal transportation vehicles, professional turf-care equipment and ground support equipment. Its brands include the more recognizable E-Z-GO and Cushman labels. Its vehicles are found from golf courses to factories, airports to planned communities, theme parks to hunting preserves. Textron is best known for aviation brands such as Bell Helicopter, Cessna and Beechcraft.

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