Polaris Industries to acquire Transamerican Auto Parts for $665M
Polaris Industries announced that it has entered into an agreement to acquire Transamerican Auto Parts Company, a privately held, vertically integrated manufacturer, distributor, retailer and installer of off-road Jeep and truck accessories, for an aggregate consideration of $665M, subject to customary closing adjustments. After adjusting for the $115M estimated net present value of future tax benefits, the purchase price implies a multiple of approximately 9.0 times TAP's EBITDA for the 12 months ended September 30. For the last 12 months ended September 30, TAP generated approximately $740M in sales, and from 2012 through 2015, achieved compound annual sales growth of 15% and compound annual EBITDA growth of 17%. The transaction is expected to be accretive to Polaris' earnings per share, excluding purchase accounting/acquisition costs, for the full year 2017. The Company expects meaningful annual cost savings within three years following closing, primarily from efficiencies related to procurement, distribution, and expanded product offerings. The transaction is subject to regulatory approval and other customary closing conditions, and is expected to close by year-end 2016. Following the closing of the transaction, TAP will operate as a distinct business unit reporting to Steve Eastman, Polaris' PG&A President. Polaris expects to fund the acquisition with borrowings under existing credit facilities.