Winnebago's First Takeover in 20 Years Widens Lineup for Economic Rebound
Winnebago Industries Inc., the biggest U.S. maker of motor homes, may make its first acquisition in more than 20 years, signaling the recreational- vehicle market sees a sustained economic recovery.
Winnebago may acquire SunnyBrook Manufacturing Inc., the privately held maker of towable recreational vehicles, by the end of the year, according to a statement yesterday. Winnebago, which didn’t disclose financial details, said it has signed a letter of intent and is still studying the potential deal.
A takeover by Forest City, Iowa-based Winnebago would mark an entry into the faster-growing towable-RV market, Craig Kennison, an analyst at Robert W. Baird, wrote in a research note. The acquisition also reflects confidence among RV makers, which have foreshadowed economic declines and rebounds.
“There won’t be a double dip in the RV industry,” Mac Bryan, vice president of administration at the Recreation Vehicle Industry Association, said yesterday in a telephone interview. “This is a marketplace that is in recovery.”
The acquisition would be Winnebago’s first in more than 20 years, Sheila Davis, a spokeswoman, said in a telephone interview. Davis said the company, which announced in November 2009 that it was studying “potential diversification strategies,” may consider additional acquisitions.
Winnebago leads the motor-home industry with a 19 percent market share, according to Robert W. Baird’s Kennison, who is based in Milwaukee. SunnyBrook sold 1,700 towable RVs last year, making it the 13th-largest manufacturer in that market, Kennison wrote yesterday in a research note.
‘Like the Concept’
“We like the concept,” he wrote. “Winnebago has the most recognizable brand in RVs, but has yet to leverage it in the faster-growing towable market. SunnyBrook would represent a small but strategic step in that direction.”
Kennison estimates Middlebury, Indiana-based SunnyBrook’s annual revenue at $30 million to $40 million.
Wholesale deliveries by U.S. RV manufacturers surged 71 percent to 177,300 units through the first eight months of 2010, according to the Recreation Vehicle Industry Association. Shipments in all of 2009 were 165,700, the lowest since 1991, according to RVIA data, as consumers deferred discretionary purchases during the economic slump.
Shipments may rise to 239,900 in 2010, a gain of 45 percent from 2009, according to Richard Curtin, an RV industry analyst and director of consumer surveys at the University of Michigan. Industry shipments may increase 8 percent to 259,600 in 2011, according to Curtin, who analyzes data for the RVIA, the industry’s Reston, Virginia-based trade group.
The RV industry includes more than 80 manufacturers, RVIA’s Bryan said.
“This is the time in the business cycle where consolidation tends to occur,” Bryan said. “While we’re still seeing some problems continuing related to consumer confidence and the availability of credit, we’re finding that primary demand is very strong. Consumers want to be in RVs and in the outdoors.”
Among the investors reaping gains from the industry is Warren Buffett’s Berkshire Hathaway Inc. Berkshire’s Forest River Inc. RV unit helped the holding company’s manufacturing, service and retailing businesses more than double earnings to $1.15 billion in the six months through June 30, according to a regulatory filing.
Winnebago and Jackson Center, Ohio-based Thor Industries Inc. are the largest, publicly traded RV makers.
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