Harley-Davidson getting back into the snowmobile business? Investor analyst Travis Brown of Seeking Alpha speculated last week that Harley-Davidson’s positive financial situation makes the company a natural to expand to take over snowmobile manufacturer Arctic Cat.
“Arctic Cat, Inc. has a snowmobile business that could complement the Harley off-season. The new SVX 450 is a unique product that could thematically bridge the two together,” wrote Travis Brown, in his stock market analysis report.
Harley-Davidson, Inc. reported last quarter to have nearly $700m in cash and equivalents. That's an account that could easily takeover Arctic Cat, Inc. (NASDAQ: ACAT) based on the market capitalization or a premium on asset valuation, Brown added.
Snowmobilers will remember that Harley-Davidson was active in the snowmobile industry from 1966 to 1975 when the company was part of the American Machine and Foundry Group (AMF). In addition to the Harley-Davidson line of snowmobiles, AMF produced others sleds including the Ski-Daddler line.
Ironically, on the heels of this speculation another report was issued by Seeking Alpha suggesting that Harley-Davidson itself was a take-over target by financial power house and private equity firm KKR.
Harley-Davidson (NYSE: HOG) issued the following statement to StreetInsider.com on today's rumor that private equity firm KKR is interested in buying the company:
"Harley-Davidson has periodically been the subject of marketplace speculation of various sorts. It's our longstanding practice not to comment on market rumors and speculation."
Take-over rumours fueled a 20+% price jump in Harley-Davidson stock late last week.
“Brand recognition, and especially brand recognition in any brand where there are many loyalists, is extremely important. No company has more loyal followers than Harley-Davidson. Those who buy Harley-Davidson products also live the Harley-Davidson lifestyle. It is more than a brand, and this is value that the company simply does not have on its balance sheet,” said Seeking Alpha’s commentator Orange Peel Investments.
Will we see Harley-Davidson return to the snowmobile business? Only time will tell. Who knows? You might be watching for an Arctic HOG on a snowmobile trail near you next winter!
