Winnebago Industries Inc. said it will buy towable recreation vehicle maker Grand Design Recreational Vehicles for $500 million in cash and stock. The RV maker expects stock portion to be funded with $105 million in newly-issued shares. Based on Friday's closing price of $23.57 for the stock, that would increase the shares outstanding by 4.45 million shares, or nearly 17%. The stock, which rallied 5.1% in light premarket trade, has run up 18% year to date through Friday, while the S&P 500 has gained 6.1%. Winnebago expects the deal to added to profit margins and earnings per share, and generate significant cash flow to facilitate a reduction in debt. "The addition of Grand Design will accelerate our expansion in the towables business, creating a broader and more balanced portfolio well-positioned to capitalize on the opportunities across the RV market and to drive improved profitability and long-term value for stakeholders," said Winnebago Chief Executive Michael Happe.
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