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Thor’s Martin Sees ‘Mutual Benefits’ with Hymer

September 19, 2018 by   Leave a Comment

Thor President and CEO Bob Martin

“Synergy” might have been one of the more often used terms by officials during Thor Industries Inc.’s conference call with investors Tuesday (Sept 18) following the announcement earlier that morning that the firm had entered into a definitive agreement to acquire Erwin Hymer Group (EHG), Europe’s largest RV manufacturer, for approximately $2.45 billion in cash and equity.

Expected to close by the end of this year, the combined company would create the world’s largest RV manufacturer with 2018 revenues forecasted at $11 billion.

“We believe the combined companies will be able to derive significant mutual benefits from design, research and development, technology and engineering, manufacturing excellence, and further creates a global platform that will generate significant preclient cash flow and provide extensive synergy opportunities,” said Thor President and CEO Bob Martin said during the conference call.

Headquartered in Bad Waldsee, Germany, EHG traces its roots to 1923 when Alfons Hymer started an agricultural vehicle production company. In 1957, his son Erwin Hymer helped to develop the company’s first caravan — the European term for a travel trailer.

EHG sold 62,000 units in FY2018, has 1,200 dealer partners, employs about 7,300 people and operates nine RV production facilities in Germany, Italy, United Kingdom and Canada. EHG boasts two dozen brands and enjoys a 29% European market share, just ahead of Trigano’s 28% share, in a European RV market valued at about $6 billion and growing. It was noted that the European market has enjoyed an 8.2% increase in terms of new vehicle registrations since 2013, from 137,000 units to 188,000 over that time period.

During the conference call, Martin identified several “synergy opportunities” that exist with respect to “leveraging each other’s institutional knowledge and expertise” and the “sharing of best practices in production methods (that would) streamline operations and expand margins.”

As far as products, Martin said that EHG North America – the company formed a few years ago when EHG acquired Roadtrek – has already begun “importing” European products to North America. Thor’s pending acquisition of EHG could certainly accelerate or even expand on that opportunity, he said. Likewise, there “could be opportunities for our companies to go over and simply learn,” he added.

Specifically, Martin pointed out, Thor should be able to leverage EHG’s status as Mercedes-Benz’s No. 1 customer for its Sprinter van and chassis. “They (EHG) have a brand new chassis they just released,” he stated. “They build the chassis for Mercedes and it’s a lightweight chassis, so it’s better fuel economy and they have an exclusive on that. They created it and then turned it over to the chassis manufacturer. But they did it in conjunction with Mercedes.”

While he didn’t expect North American products to be sent over to Europe – U.S.-built RVs are too big and heavy for Europe’s tight and weight-restricted roads – Martin saw an opportunity to leverage EHG’s campervan products for North America’s Class B customers.

“We see that as our opportunity for the younger buyer, the Millennial that’s coming into the market, and as we talk more to (EHG’s) management team, they have the same phenomena. They have the same demographics in Europe, so that’s why it’s taking off there,” Martin said.

“They build products that are basically minivans,” he continued, “that have a pop-top tent and the only RV component is a sink and a stove that actually comes out. People can use this as an every-day driver. So they’ve been very creative in really reaching that younger buyer and producing units that are lower cost as well. And that’s what’s reaching the younger buyers again. So I see those opportunities for our companies just to share, just as we do here.”

On the financial side of synergy opportunities, Colleen Zuhl, Thor’s senior vice president and chief financial officer, said the company expects “the synergies associated with the combined entity to create meaningful additional value.”

“Cost savings, including material sourcing and operating efficiency initiatives, are anticipated as Hymer centralizes purchasing decisions and implements other strategic protocols among their operating facilities,” Zuhl said during the conference call.

“We have a proven track record of generating significant acquisition-related synergies,” she continued. “We believe the opportunities arising from this acquisition to be even greater, giving the ability to combine the best practices of two geographically diverse markets. As we experienced with our recent Jayco acquisition, we believe the synergy will enhance the performance of both companies. We fully expect to achieve meaningful top and bottom line benefits over the next few years and beyond.”


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