reuters reports skidoo group sale underway
Amsnow
Reuters news service reports that Bombardier Inc. has begun the process to divest its recreational products business - which includes the Ski-Doo snowmobile brand that was the foundation for the Canadian transportation conglomerate.
According to Reuters the recreational products division will be sold as a single entity as part of the major restructuring program Bombardier Inc. announced in early April when it unveiled a billion Canadian dollar fourth-quarter loss. The loss was blamed in part on a slump in the aviation sector.
Reuters also reports that Montreal-based Bombardier, which is the world's No. 3 civilian aircraft maker and the biggest rail transportation manufacturer, said it had received numerous calls from interested parties but that it would not sell the unit to a rival company because of regulatory concerns.
According to a press statement from Bombardier, "The business will not be sold to a direct competitor as this would require regulatory approvals, which may be impossible to obtain, or would result in unacceptable delays in closing a transaction."
In essence that would preclude a sale to companies such as Arctic or Polaris, which most likely would have to get US Justice Department clearance. Such an acquisition of Ski-Doo, Sea-Doo and Bombardier ATVs by Polaris would put the Minnesota company well over 50% market share in snowmobiles and provide dominant shares in PWC and possibly ATV niches as well.
Bombardier has stated that an information memorandum will be sent out to interested parties in early May.
Reuters also reports that the Bombardier family is expected to be a minority partner in an unnamed investor group expected to make a bid for the division.
In addition to sleds, PWC and ATVs, the division includes Evinrude and Johnson outboard motors. The recreational products group has annual sales of $2.5 billion (Canadian dollars).
As a result of the news, Reuters reported that Bombardier's class B shares were up 3 Canadian cents at C$3.28 on the Toronto Stock Exchange.