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Thor (THO) Acquires German RV Manufacturer Erwin Hymer Group

Zacks Equity Research

Thor Industries, Inc. THO has completed the acquisition of Europe's one of the largest recreational vehicles (“RVs”) manufacturer Erwin Hymer Group (“EHG”). This addition will make Thor the world's largest RV producer, with leading positions in both North America and Europe.

Terms of the Deal

The acquisition excludes EHG's North American businesses, and reflects the reduction of purchase price by €170 million (approximately $194 million) and an expected obligation by €180 million (about $205 million) that the company would have otherwise assumed under the terms of the original stock purchase deal.

Moreover, the said adjustment led to a reduction in the financing debt that the company had syndicated to fund the purchase, while equity consideration remained at 2.3 million shares, in line with the original stock purchase agreement.

The acquisition, which marks the company’s biggest in its history, is funded through a combination of approximately $95-million debt and 2.3 million shares of Thor common stock.

Transaction-related costs (excluding loss on the foreign currency forward contract, purchase accounting adjustments and future interest charges) are projected in the range of $40-$55 million for the nine-month period of fiscal 2019 subsequent to Thor’s first quarter that ended on Oct 31, 2018.

Benefits of Thor

Bad Waldsee, Germany-based EHG is a leading manufacturer of RVs in the growing European market, with a strong lineup of industry-leading vehicle brands. The deal will open up opportunities before the Elkhart, IN-based RV manufacturer, Thor, to imprint its position in the growing European RV market.

Meanwhile, the combined entity is expected to benefit through sharing of best-in-class operating practices and enhancing customer experience throughout the worldwide RV market. The companies will enhance procurement strategies, leverage technology and engineering resources, cross-pollinate aftermarket support, as well as dealer development methods that will be essential for the integration of EHG.



Shares of Thor have declined 33.4% in the past six months, outperforming its industry’s 45.8% decline. However, its net sales in the fiscal first quarter were down 21.3% from the prior-year period. Also, its adjusted earnings of $1.28 per share declined 47.3% year over year. The downside was mainly due to lower unit shipments across the board. Nevertheless, the recent move is likely to enhance the company’s performance in the near term, as it is strengthening the company’s product development, technology and production efficiency, making it a global leader in the RV market.

Zacks Rank & Key Picks

Currently, Thor carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the Zacks Construction sector include Gates Industrial Corporation PLC GTES, Lennox International Inc. LII, and Great Lakes Dredge & Dock Corporation GLDD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gates Industrial, Lennox and Great Lakes’ earnings for the current year are expected to increase 44.6%, 18.9% and 111%, respectively.

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