Winnebago Industries, Inc. (NYSE: WGO)
Winnebago Industries is having an incredible day in the market today, and for good reason. The company announced acquisition news that's leading to excitement among investors. Today, we'll talk about the acquisition news, how the stock reacted to the news, and what we can expect to see from WGO moving forward.
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WGO Gains On Acquisition News
As mentioned above, Winnebago Industries is having an incredible day in the market today as the result of an acquisition. In news announced early this morning, we learned that the company has entered into a definitive acquisition agreement.
Under the terms of the agreement, WGO will be acquiring Grand Design Recreational Vehicle Company in a deal valued at about $500 million. This amount will be paid in a mix of cash and newly issued shares.
The Acquisition Is A Great Move
The acquisition mentioned in the news was a strong move for WGO. Grand Design was founded in 2012 and has grown relatively quickly since it was created. In fact, in the last 12 months, the company brought in $428 million in revenue. As a fast growing company with annual revenue close to the total acquisition cost, Winnebago got a great deal on this acquisition.
Along with the news of the acquisition, management at both Grand Design and Winnebago offered statements. Here's what they had to offer:
“Grand Design has built a tremendous reputation and position in our industry by delivering quality products and high levels of customer satisfaction, and we are excited to welcome them to the Winnebago family... Grand Design's differentiated and nimble approach to serving today's towable consumer, proven ability to deliver exciting new products and deep industry expertise complement our existing capabilities and Winnebago's iconic brand. The addition of Grand Design will accelerate our expansion in the towables business, creating a broader and more balanced portfolio well-positioned to capitalize on the opportunities across the RV market and to drive improved profitability and long-term value for shareholders.
I look forward to working closely with Don, along with the rest of the Grand Design team. With a shared focus on quality products, dealer relationships and customer service and satisfaction, together we will be even better positioned to serve dealers and customers well into the future.” - Michael Happe, President and CEO at WGO.
“This is an exciting day for Grand Design and reflects the hard work and dedication of everyone involved in our rapid growth and success over the past several years – the Grand Design team, our valued customers and our investors. We have incredible respect for Winnebago and are honored to join an iconic company that shares our dealer-centric, customer-focused culture. This shared foundation makes our two companies an ideal fit and we look forward to maintaining our unique identity as an agile competitor as we leverage Winnebago's strong platform to broaden Grand Design's reach and deliver the best possible product and service to our dealers and our customers.” - Don Clark, Co-Founder and CEO at Grand Design.
How The Market Is Reacting To The News
As investors, one of the first things that we learn is that the news moves the market. Anytime positive news is released with regard to a publicly-traded company, we can expect to see gains in the value of the stock. The news released with regard to WGO was overwhelmingly positive. After all, the company has acquired a competitor in the industry for a very good price, ultimately expanding their product line. As a result, we're seeing gains in the value of the stock today. Currently (1:16), the stock is trading at $29.32 per share after a gain of $5.75 per share (24.40%) thus far today.
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What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish opinion with regard to what we can expect to see from Winnebago. At the end of the day, the company has already built a long-lasting and highly trusted brand when it comes to Class A recreational vehicles. Today's acquisition of Grand Design will give the company a leg up in the towables sector, giving WGO a wider audience and better opportunities to make sales. All in all, today's move was overwhelmingly strong and I'm expecting for it to lead to gains.
[Image Courtesy of Pixabay]