This just appeared in our local rag. <br /><br />Polaris mulls bid for Sea-Doo, Ski-Doo<br />Dee DePass, Star Tribune <br /> <br />Published April 17, 2003 BID17 <br /><br />Polaris see, Polaris Sea-Doo?<br /><br />Analysts believe Polaris Industries is mulling a bid for the snowmobile and watercraft arm of Montreal-based Bombardier, which makes the Sea-Doo brand of personal watercraft and Ski-Doo snowmobiles.<br /><br />Bombardier also manufactures all-terrain vehicles, Johnson and Evinrude outboard engines, snow-grooming equipment and small engines for motorcycles and other personal recreational craft.<br /><br />Bombardier put the unit on the block earlier this month, and a Polaris bid would likely go up against others from Honda, Yamaha, or members of Bombardier's founding family.<br /><br />A Polaris bid would mark a dramatic departure for the Medina-based company, which has stayed away from major acquisitions in the past. The Bombardier unit would roughly double Polaris' size from its current $1.5 billion in annual worldwide sales.<br /><br />Polaris makes ATVs, snowmobiles, watercraft and motorcycles.<br /><br />"Polaris could be an interesting company if it bought the Bombardier unit," said Robert Evans, senior research analyst at Craig-Hallum Capital in Minneapolis. "They would have about 65 percent of the snowmobile market and over 50 percent of the personal watercraft market. And they would add a lot of dealer distribution."<br /><br />Polaris CEO Tom Tiller declined to comment Wednesday on the speculation that he is considering a bid. However, he noted that Polaris' past purchases have only involved buying distributorships in an effort to expand its sales base. On Tuesday he was peppered with questions about Bombardier during Polaris' quarterly earnings conference call.<br /><br />The merger speculation began earlier this month, when Bombardier, a troubled conglomerate that makes planes, trains, snowmobiles and personal watercraft, announced that it would divest its recreational division, raise new equity and slash its dividend to recover from $2.2 billion in recent write-downs. On April 3, Bombardier reported a net loss of $615 million on $23.7 billion in fiscal 2003 revenue.<br /><br />Analysts expect Bombardier's equity offering to raise roughly $800 million, and for the recreation division to fetch nearly $1 billion in cash. Other asset sales could generate about $500,000.<br /><br />"There are lots of large investment banks that would love to try and help Polaris put together a deal and try to create the proper funding," Evans said. "There will be no shortage of interest if they chose to pursue an acquisition."<br /><br />Polaris reported sales Tuesday that increased in all categories except personal watercraft. <br /><br />First-quarter net income rose 6.9 percent to $12.4 million, or 55 cents a share. Company officials said they stand by previous estimates for full-year earnings of $4.70 to $4.85 a share, up from $4.39 in 2002.<br /><br />Polaris' 2002 net income rose 13 percent to a record $103.6 million on a 2 percent gain in sales to $1.5 billion.<br /><br />Polaris shares closed Wednesday at $52.94, down $2.06.<br /><br />Dee DePass is at <br /><br />>ddepass@startribune.com.
