Look For Textron's Arctic Cat Acquisition To Go Smoothly

Arctic Cat Inc ACAT, a Minneapolis-based manufacturer of snowmobiles and all-terrain vehicles, is enjoying soaring shares Wednesday following an announcement of a definitive agreement to be acquired by Textron Inc. TXT for $18.50 per share in cash.

Analysts at Wunderlich are maintaining a Hold rating on Arctic Cat and don’t anticipate higher buyout offers to come to fruition for the company due to a current lack of earnings visibility, high buyout premium and considerable operating losses. Arctic Cat shares are up over 41 percent on Wednesday.

Along with producing light aircraft and helicopters, Textron also manufactures specialized vehicles including golf carts. The addition of Arctic Cat would expand the company’s presence in off-road vehicles and enable Textron to enter the snowmobile industry.

Q3 Print Expectations

Arctic Cat is expected to release third-quarter results in the next week, although the exact date has yet to be released. Consensus analyst’s estimates are forecasting $177 million and $0.04 EPS in Q3.

“Arctic Cat continues to face significant challenges regarding inventory destocking dealers in both its off-road and snowmobile segments, thus pressuring near-term earnings results,” said Wunderlich.

At Last Check

• Arctic shares were up 41.43 percent at $18.51.
• Textron was down 7.05 percent at $45.90.