Winnebago May Acquire SunnyBrook Manufacturing

October 21, 2010
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Winnebago Industries Inc., the biggest U.S. maker of motorhomes, may
make its first acquisition in more than 20 years, signaling the recreational vehicle market sees a sustained economic recovery, Bloomberg reported.

Winnebago may acquire SunnyBrook Manufacturing Inc., the privately
held maker of towable recreational vehicles, by the end of the year,
according to a statement Monday (Oct. 18). 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 (RVIA), said Monday 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 motorhome 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 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
RVIA. 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.

Consolidation Time
“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.

Shares of Winnebago have lost 20 percent this year after more than
doubling in 2009. Thor has declined 1.6 percent this year.

Story courtesy of RV Business.

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