Baird Likes Winnebago’s SunnyBrook Buyout
Editor’s Note: Robert W. Baird & Co. issued a client newsletter last week following Winnebago Industries Inc.’s announcement that it had completed the purchase of SunnyBrook Manufacturing Inc. Excerpts from the Baird newsletter follow.
Acquires SunnyBrook RV to enter towable market. As expected, Winnebago has acquired SunnyBrook RV, a small manufacturer of towables. We expect the financial impact to be modest. We like the deal as it enables Winnebago to leverage its well-recognized brand in the faster-growing towable RV segment.
Closes towable acquisition. Winnebago, through a newly created subsidiary, Winnebago of Indiana, purchased the assets of SunnyBrook RV for $5.7 million in cash, far less than we had assumed. The transaction represents a small but important step into the towable market – a category Winnebago has ignored for years.
Small but strategic. Based on limited information, we estimate its annual revenue at approximately $20 million, which would make the towable segment perhaps under 5% of go-forward Winnebago revenue. We expect Winnebago to issue an 8-K to clarify these figures, but the impact on our estimates is likely to be modest.
SunnyBrook profile. SunnyBrook dealers sold over 1,700 towable RVs in 2009 (1.3% share), according to Statistical Surveys Inc., making it the No. 13 manufacturer of towables. SunnyBrook dealers have sold approximately 1,000 towables so far this year (0.9%), implying modest share losses.
Strategic rationale. The deal enables Winnebago to: 1) enter the faster-growing towable market; 2) establish a manufacturing footprint in the Elkhart, IN area, where most towables are made; 3) leverage the Winnebago brand in a new category; and 4) identify modest cost and distribution synergies. Winnebago has started small, which seems appropriate given its limited experience integrating acquisitions.
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