To boost its specialized vehicles unit
Textron Inc reported a 4.4 percent fall in quarterly profit, and said it would buy all-terrain vehicle maker Arctic Cat Inc for $247 million in cash as it looks to strengthen its specialized vehicles business amid slowing business jet sales.
Textron’s offer of $18.50 per share represents a premium of 41.3 percent to Arctic Cat’s Tuesday close.
Cessna aircraft maker Textron’s specialized vehicles and equipment business makes golf cars and off-road utility vehicles, and is housed within its industrial segment, the company’s second biggest.
“With our recent product introductions in the outdoor recreational vehicle market under the Stampede name, we believe Arctic Cat … provides an excellent platform to expand our portfolio,” Textron said.
Artic Cat’s shares were up 40.2 percent at $18.35 in premarket trading on Wednesday, while Textron was down about 1 percent at $49.00.
Artic Cat, which also makes side-by-sides, snowmobiles as well as related parts and garments, has been struggling with a softening demand in a competitive market.
The company, in the midst of trying to orchestrate a turnaround, has posted a bigger-than-expected loss for the past four quarters, while its revenue has also missed analysts’ expectations in each of those quarters.
Textron forecast 2017 adjusted earnings in a range of $2.50 to $2.70 per share, on revenue $14.3 billion.
The company’s income from continuing operations fell to $215 million, or 78 cents per share, in the fourth quarter ended Dec. 31, from $225 million, or 81 cents per share, a year earlier, hurt by lower business jet sales.
Textron said it recorded a pre-tax restructuring charge of $8 million in the quarter.
Total revenue fell 2.5 percent to $3.83 billion. (Reporting by Ankit Ajmera in Beng