Drew Industries Inc. reported Tuesday (March 16) that its wholly owned subsidiary, Lippert Components Inc., completed the previously announced acquisition of certain intellectual property and other assets from Cassopolis, Mich,-based Schwintek Inc.
The purchase included several products for which patents are pending, including an innovative wall slide-out mechanism, an aluminum cylinder for use in leveling devices for motorhomes and a new tent camper device, according to a news release.
The purchase price consists of $20 million paid at closing from available cash, plus an earn-out which is expected to aggregate $10 million to $15 million over the next three to five years, depending on future unit sales of these products in excess of pre-established hurdles. Mike Schwindaman and Mike Howard, the owners of Schwintek, entered into consulting, product development and non-competition agreements with Lippert Components.
“Our strong balance sheet and cash position enabled us to complete this acquisition without incurring debt,” said Fred Zinn, Drew president and CEO. “We still have adequate cash to continue to pursue expansion opportunities that we believe will yield favorable returns on our investment.”
“Largely through new product introductions and market share growth, we have more than tripled our content in the average travel trailer and fifth-wheel RV, from $670 in 2001 to $2,101 in 2009. These new products fit into our long-term plan to continue to increase our content in all types of RVs,” said Zinn. “Mike Schwindaman has a proven ability to design new products that are both extremely functional and efficient to manufacture.
The product development agreements with Schwindaman and Howard “greatly expand the R&D capabilities of Lippert Components, and provide a framework for our purchase of additional RV products they design over the next five years. They are already working on a ‘new concept’ leveling device for motorhomes that utilizes the aluminum cylinder we just purchased.”
“The new wall slide-out design is expected to gain substantial market share in both the motorhome and towable RV markets, because of its significant advantages over many other slide-out mechanisms,” said Jason Lippert, President and CEO of Drew’s subsidiaries, Lippert Components and Kinro Inc. “This wall slide-out mechanism is considerably lighter and more space efficient. It also minimizes the need for manual adjustments by the RV user, significantly reducing one of the biggest warranty issues for RV dealers. Schwintek and Lippert Components have been selling this wall slide-out for several months, and it has generated a high level of interest throughout the RV industry. Lippert Components will now be the exclusive supplier of this product. We are also exploring alternative applications for this design, for example, in our power TV lifts.”
“We will be manufacturing the products we acquired in our existing factories with very little additional overhead, which should allow us to be highly efficient,” said Lippert. “As a result, we expect this acquisition to be accretive to our earnings in the first year. Further, we expect to leverage our extensive marketing and distribution capabilities to continue to gain market share.”
Drew Industries Inc. Thursday (Feb. 18) reported that its wholly owned subsidiary, Lippert Components Inc., agreed in principle to acquire certain intellectual property and other assets from Michigan-based Schwintek Inc.
The purchase would include several products for which patents are pending, including innovative RV wall slides that are considerably lighter, more space-efficient and more reliable than previous slide-out designs, according to a news release. The purchase price, undisclosed at this time, is expected to include cash payable at closing, plus an earn-out depending on future unit sales.
It is expected that the cash portion of the purchase price payable at closing will be funded from available cash. Closing of the transaction, which is anticipated within 45 days, is subject to completion of due diligence, agreement on final terms and conditions, the execution of definitive transaction documents and satisfaction of customary closing conditions.
“Mike Schwindaman, an owner of Schwintek, would serve as a consultant to Lippert Components,” said Jason Lippert, president and CEO of Drew subsidiaries, Lippert Components and Kinro Inc. “Mike has an exceptional ability to create highly innovative, cost-effective products for RVs, as well as solutions for RV weight reduction. We expect that he will continue to bring us great ideas, and we hope to have a long and productive partnership with Mike.”
“With our proven ability to manufacture and market quality products and provide excellent customer service, we are confident these products will quickly gain acceptance throughout the RV industry,” said Fred Zinn, Drew resident and CEO. “Through this transaction, we would gain a significant opportunity to increase our content in both towable RVs and motorhomes.”
In a separate transaction, Lippert Components acquired the patent-pending design for a six-point leveling system for fifth-wheel RVs. The purchase price was $1.4 million payable at closing, plus an earn-out depending on future unit sales of the system.