Thor Industries Adquire Erwin Hymer Group e se Torna a Maior Fabricante de Veículos Recreativos do Mundo

Que aquisição interessante, @Fort13, @Bastter, @oxe, @celtiberian, @Alienista, @Huoya.

Bob Martin - President and Chief Executive Officer

Thanks Bruce. Earlier this morning, we announced that we have entered into a definitive agreement to acquire the Erwin Hymer Group, a German-based private company for an enterprise value of approximately €2.1 billion with purchase price to be funded with cash and equity. Equity consideration will consist of approximately 2.3 million shares of Thor. The combination creates the worlds largest global RV manufacturer with number one market share in North America and Europe, and establishes a global sales and production footprint for our Company.

This announcement demonstrates our commitment to a strategic and financially compelling transaction that is an important step in our journey to become the world's premier RV manufacturing company. Upon closing, we will become the number one manufacturer in North America and the number one manufacturer in Europe with total fiscal 2018 revenues of approximately $11 billion.

For our stakeholders, this acquisition will provide Thor an entry into the €6 billion plus and growing European RV market with a leadership position. This further enables us to go-to-market with a company that has 60-plus year track record of excellence within the RV industry, represented by outstanding brands that are synonymous with innovation and quality. The Erwin Hymer Group provides a complementary product line-up that spans across multiple price points, categories and is support by a strong dealer network. We believe the combined companies will be able to drive significant mutual benefits from design, research and development, technology and engineering, manufacturing excellence and further creates a global platform that will generate significant free cash flow and provides extensive synergy opportunities.
Over my 25-plus years in the RV industry, I've always admired the organization and had been keenly aware of how successfully they compete in the European markets with an outstanding record of innovation, product development and overall operating excellence. After our extensive due diligence, we have come away even more impressed with the company, the management team and the legacy created by Erwin Hymer and the Hymer family. There is a strong alignment and cultural fit between the two organizations, as a result of both the similarities of our histories and our vision of the future of the RV Industry. Both of us place a tremendous amount of importance on our relationships with our employees, dealer network and supplier channel and both have strong commitment to optimizing the overall RV experience through innovation, quality products and the breadth of vehicles in our portfolio. This transaction is expected to be accretive to earnings in the first year, before taking into account anticipated synergies, purchase accounting adjustments and transaction related costs. It is also well aligned with our strategic objective to enhance long term shareholder value.

Let me now take a few minutes to introduce you to the Erwin Hymer Group, a company that began RV production in 1957. EHG currently has the number one market position in Europe with approximately 29% market share by revenue and is the only European OEM with a North American presence. They have an outstanding dealer network that includes over 1,200 dealers across 35 countries. The company is headquartered in Bad Waldsee, Germany with a manufacturing footprint that includes six production sites in Germany, as well as RV production in England, Italy and Canada. The organization employs about 7,300 dedicated team members.

Over two thirds of EHG's vehicle sales are generated by motor caravan, which are the equivalent to our motorized Class A and Cs. About 17% of their sales come from campervans, our Class B category. And the remaining RV sales are from caravans, which are the equivalent to our travel trailer segment. The Erwin Hymer Group has done a great job on capitalizing on their various brands by ensuring each brand has a clear identity and target customer group. Among their many recognizable brands are Hymer, Bürstner, Dethleffs, Carado, Niesmann Bischoff. Roadtrek is a well known brand in Canada and the United States as well. These brands are not only well known, but immediately equated with quality.

EHG's product line up spans across the price point spectrum from a $10,000 caravan to a $200,000-plus luxury motor caravan. In addition to their vehicle group of businesses, EHG drives 3% of the revenue from accessories and services, caravanning equipment, tent trailers, chassis and suspension technology and another 3% of the revenue from an RV rental business, which has a vehicle fleet of over 2,600 units. EHG has an outstanding dealer network throughout Europe as well as in North America. They have approximately 250 dealers in Germany. The network is well diversified with the top five distributors accounting for about 10% of their total revenues. The EHG management team utilizes proprietary planning tools that allow them to monitor and benchmark the performance of each of their distribution partners. Their close relationship with the deals network has been rewarded with extraordinary loyalty and excellent results.

The combination of Thor and EHG results in a company that reported combined sales of $9.8 billion in 2017, and we anticipate that following the conclusion of the 2018 fiscal years, the combined entity will have approximately $11 billion in sales. The combined company will also have exposure across North America and Europe, which will allow Thor to enter into the growing European market, as well as diversifying microeconomic cyclicality. On the products side, EHG's focus on motor caravan complements our focus on towables and creates a more balanced combined product mix.

As mentioned, EHG has a leadership position within Europe. With one other large player, the remaining competitive landscape is fairly fragmented. The European RV market is large and growing. The motor caravan and campervan markets have experienced significant growth over the last five years and are expected to continue to grow over the foreseeable future, assuming current microeconomic conditions continue. Since 2013, the European market has grown from 137,000 units to 188,000 units in 2017, a compound annual growth rate of 8.2%. In 2018, the European market is up 6.3% year-to-date through June.

The strong growth has been supported by solid macroeconomic fundamentals, as well as certain other favorable trends, including a growing desire amongst consumers for the unique travel experiences. More specifically, customer feedback has indicated that leisure activities are the number one discretionary spending category in Europe with 82% of Europeans expected to travel domestically within the next two years. The increasing urbanization in Europe impacting the desire of city dwellers to enjoy nature. The number of Europeans over the age of 55, an important RV demographic number, is expected to grow to 30% through 2040, outpacing the 3% growth in overall population over the same timeframe. And similar to U.S. trends more and more millennials are appreciating the RV lifestyle.

Growth and demand in motorized RVs has been supported by a secular shift to smaller, more fuel efficient RVs suitable for everyday use. Similar to Thor, EHG has a proven track record of bringing to market innovative and trustworthy products. Innovation has significantly enhanced EHG brands and reputation. For example, EHG is the first player in the RV sector to receive permission to test autonomous RVs in public roads in Canada. In addition, the group has an impressive knowledge in the field of alternative power trains. They have continued to internally develop proprietary technology, leading to higher quality products, fewer defects and safer vehicles.

EHG's commitment to innovation has continuously been recognized over the years by independent third-party industry participants. Now that we've gone through the courtship process over these past several months, each company has greater appreciation of the other management team. EHG is led by an experienced and proven management team led by Martin Brandt as CEO. Behind the executive management team is an organization that has demonstrated an ability to grow market share, as well as add value for stakeholders.

We have met with the EHG executive management team numerous times throughout this process, and we believe that our strategic priorities align very well. As with previous Thor acquisitions, this management team will operate in a decentralized manner. This preserves the legacy and the culture of the Erwin Hymer Company, while also providing the EHG management team with a wealth of resources to pull from as they continue to implement their growth strategy initiatives. Thor and EHG will work together to identify areas where we can leverage each other's institutional knowledge and expertise to maximize the performance and profitability of the combined entity.

Now, I'm going to turn things over to Colleen for a few minutes to review some of the transaction highlights, financing details and discuss our current capital strategy.
Thor Industries, Inc. (THO) CEO Bob Martin on Acquisition of Erwin Hymer Group Conference Call (Transcript) | Seeking Alpha

Colleen Zuhl - Senior Vice President and Chief Financial Officer

Thanks Bob. As stated in our opening remarks, the enterprise value is approximately €2.1 billion with the purchase price to be funded with cash and equity. Equity consideration will consists of approximately 2.3 million shares of Thor. EHGs forecast of their fiscal year 2018 EBITDA, as adjusted, is approximately €235 million. Their fiscal 2019 plan reflects an EBITDA of approximately €300 million.

The transaction is expected to be accretive to our earnings per share in year-one before consideration of synergies, purchase accounting adjustments and transaction related expenses. The cash portion of the purchase price will be financed through fully committed credit facilities led by JPMorgan and Barclays. The financing includes a seven year term loan and a five year senior secured asset-based loan. We plan on meeting with the rating agencies to start the credit ratings process.

Following the closing of the transaction, we anticipate repurchasing shares, both opportunistically and systematically, in order to offset the issuance of shares to the Hymer family. This transaction is expected to close in the calendar fourth quarter of 2018, which would be during the second quarter of our fiscal 2019. The transaction is subject to the usual and customary closing conditions, including regulatory approval and other necessary approvals. We expect 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 decision and implements other strategic protocols among their operating facilities.
In addition, incremental value will be created as Thor and EHG benefit from the sharing of best practices in such areas as engineering, design, R&D and technology and marketing and HR strategies. Both companies will also be able leverage their manufacturing and financial management expertise. And we expect additional value will be traded through overall spending leverage, procurement strategies and production methodologies. We have a proven track record of generating significant acquisition related synergies.

We view the opportunities arising from this acquisition to be even greater given the ability to combine the best practices of two geographically diverse markets. As we experienced with our recent Jayco acquisition, we believe the synergies 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.

Let me conclude with a quick overview of our capital strategy, the strategy that supports our operating plan and formulates our overall investment thesis. The strategies reflect the following; our primary focus is to continue to invest in organic growth initiatives; the combined company is expected to generate significant cash flow that will facilitate rapid debt and leverage reduction; we will opportunistically fund acquisitions in the global RV industry, both core and adjacencies; we will also return capital to our shareholders with predictable dividend growth and repurchases of our shares, both opportunistically and systematically.

And now, I will turn the call back to Bob for some concluding comments.

Thor Industries, Inc. (THO) CEO Bob Martin on Acquisition of Erwin Hymer Group Conference Call (Transcript) | Seeking Alpha

Bob Martin - President and Chief Executive Officer

I would like to finish our prepared remarks with a summary of this unique and transformational opportunity for Thor and its shareholders. The combination of Thor and EHG creates a premier global company with leading positions in both the North American and European RV markets. There is no other existing RV company to have the scale and reach that this combined entity will have. Through this acquisition, we gain significant exposure to the European RV market, as well as a stable of outstanding brands, a company with a long track record of innovation and quality, a global assembly footprints and unparalleled distribution network. And EHG will benefit from a partner that is deeply rooted in the North American market.

Thor has a proven history of acquiring successful companies with strong management team that have a passion for the RV lifestyle, in an entrepreneurial spirit that drives them to continue its innovation and exceptional quality. With this foundation, Thor postures their growth through sharing of best practices and collective experience and knowledge of employees throughout the company to enhance shareholder value. We see all the necessary ingredients within the Erwin Hymer Group to continue this history.

The acquisition is a strong strategic fit with a complementary company culture, expanded product portfolio and geographic diversification, as well as strong cash flows. Substantial advantages have been identified and other benefits will be derived from design, engineering and manufacturing excellence. The sharing of best practices and production methods will streamline operations and expand margins. Knowledge sharing and R&D will accelerate development of technology, innovation and ensure new technologies or features are rapidly adapted in both North America and in Europe. As the leading European RV company with a strong management team we intend to keep in place. We are confident that EHGs growth trajectory will continue into the foreseeable future.

Thor Industries, Inc. (THO) CEO Bob Martin on Acquisition of Erwin Hymer Group Conference Call (Transcript) | Seeking Alpha