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Martin Moylan

Textron is buying vehicle maker Arctic Cat in $247 million deal

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Updated 5 p.m. | Posted 7:38 a.m.

Defense contractor Textron is buying iconic Minnesota snowmobile maker Arctic Cat in a deal valued at about $247 million.

Textron said Wednesday that it will pay $18.50 per Arctic Cat share, a 41 percent premium to its Tuesday closing price. The transaction also includes debt, though no exact figure was provided.

Arctic Cat will be folded into Textron's specialized vehicles business, but the brand, as well as its manufacturing, distribution and operational facilities, will be maintained.

Minneapolis-based Arctic Cat employs around 1,600 people, but it's been struggling recently. For the six months ending Sept. 30, it posted a net loss of $23 million. Sales dropped by a fifth from the the same period a year ago to $269 million.

Rhode Island-based Textron has faith that Arctic Cat can roar back and rev up snowmobile and ATV sales. The company's CEO said he expects the combination of the two firms' products and research and development will impress customers and dealers.

Textron did not comment on how the deal may affect Arctic Cat's operations and employment in Minnesota. Most of the company's some 1,600 employees are in Minnesota, concentrated in Thief River Falls.

Arctic Cat sleds account for many of the some 200,000 snowmobiles registered in Minnesota. And the sale of the company has some fans worried about the future.

"It's tough to hear about. They have been an icon in the snowmobile industry for many years," said Sam Kofstad, a board member of the Fourtown Grygla Sportsmans Club in Thief River Falls.

Arctic Cat was founded in 1961 in Thief Rivers Falls, under the name Polar Manufacturing Company. Arctic Cat's founder, Edgar Hetteen also helped start Polaris Industries, another leading snowmobile manufacturer.

In its heyday in the 1960s and '70s, the snowmobile industry sold as many as 500,000 sleds a year. Last year, only about 56,000 machines were sold in the U.S. Some Arctic Cat fans worry about the brand continuing.

"Market share has been slipping. Poor snowmobile sales. Mild Kansas City-like winters the last couple of years," said Scott Wakefield, communication chair for Minnesota United Snowmobilers and an Arctic Cat rider since he was 6 years old.

While he understands the business factors behind the sale, he said he is apprehensive about the economic impact of the sale and its effect on the plant in Thief River Falls.

Thief River Falls Mayor Brian Holmer said he's a bit concerned but generally optimistic about the operation's future under Textron.

"I think they're a very successful company from what I've seen and we can build a great product here in Thief River Falls falls," he said. "I think Textron is a good bet."

The Associated Press contributed to this report.