Is Textron selling Arctic Cat to John Deere?

[yamajammer76]

So there has been some talk of Textron looking to offload Cat over the past few months. Just rumors and speculation. Today SnoWest reignited the rumors that John Deere is actively pursuing a purchase of Arctic Cat from Textron. Normally I’d say just a rumor, but what made it more interesting is that Country Cat reposted it. Country Cat is the world’s largest Arctic Cat dealer. If any dealer knew anything going on it would be Country Cat. In the comments a person who claims to have insider knowledge said “Yes, this is really happening right now.” Another who claimed to work for Cat (assuming a line worker) said who he believed to be Deere executives were touring although he also asked about Kawasaki. Personally I don’t see Kawasaki interested as they already have a successful dirt line and US based production. John Deere makes a lot more sense.

Anyhow I just thought it might be a fun rumor to discuss since there isn’t any new Yamaha rumors anymore and if this deal were to happen John Deere might be a much better parent company for Arctic Cat. At least John Deere seems to have more passion for product compared to the conglomerate Textron who seems more interested in commercial and military contracts versus the consumer market.

 

[earthling]

From a pure outsiders perspective, I am not sure how it would make sense. When one company purchases another, especially at John Deeres level, it would be to grow market share, not to get into a new market. I could see Deere purchasing another tractor company because they had a more advanced agricultural robotics solution but to get into recreational vehicles would be a complete departure from all things John Deere. Remember AMF/Harley?

 

[yamajammer76]

From a pure outsiders perspective, I am not sure how it would make sense. When one company purchases another, especially at John Deeres level, it would be to grow market share, not to get into a new market. I could see Deere purchasing another tractor company because they had a more advanced agricultural robotics solution but to get into recreational vehicles would be a complete departure from all things John Deere. Remember AMF/Harley?

The only way it makes sense if if John Deere wants to expand their Gator line into the sport market. As far as snowmobiles are concerned Deere does have legacy there and it gives their dealers an optional product line during the winter. I'd say it actually makes more sense for John Deere to own it than Textron since Textron really isn't a company focused on consumer goods at all except for E-Z-GO. Jacobson, Cushman, etc are all commercial products and the rest is avation and military defense contracts.

I guess for now just a rumor, but we always need a good summer rumor around here to drive a little traffic.

 

[earthling]

The Deere snowmobile legacy won’t matter to any new buyer and I just cannot see the culture there Deere) wrapping its head around a Powersports culture. They gain very little for the Gator in my opinion. But. Let’s speculate who *should* buy it.

 

[yamajammer76]

The Deere snowmobile legacy won’t matter to any new buyer and I just cannot see the culture there Deere) wrapping its head around a Powersports culture. They gain very little for the Gator in my opinion. But. Let’s speculate who *should* buy it.

There was confirmation that Yamaha did want to buy it awhile back, but Textron said no. Now Yamaha is out and their not coming back. CFMoto was also an interested party according to rumors, but if Cat goes to the Chinese I don't see how that saves the brand as far as a manufacturer goes. They would simply buy the brand name to put on their Chinese produced dirt products and shut down TRF and the snowmobile line. Maybe not right away, but CFMoto would be the end of Cat as we know it.

You can dismiss the JD rumor, but it definitely has a lot of legs right now and it's running all over social media.

 

[earthling]

The social media echo chamber? I am not discounting the rumor, I just don't see the benefit to a company like deere who has $90B in assets and the resources to build anything they want to. Its not like Cat has anything to offer other than brand but companies do silly things all the time.

 

[yamajammer76]

Yes probably nothing will come of it, but was just something going around and it was something half way believable. I guess we'll see what happens.

 

[RAMSOMAIR]

Leaping cats to leaping deer! Or is it Deere?

 

[earthling]

Won't the cats kill the deer?

 

[pdiddy]

When Deere bailed on sleds in 1982 guess who bought all the leftovers... Polaris!

 

[biffdotorg]

Deere buying anything from Textron, it would be for the Offroad dirt products that they farm out to other MFG's already. The sled line could go away easily. Maybe keep them up until they run out of parts and extra stock, but I would bet dollars it's for the dirt line.

 

[earthling]

Deere buying anything from Textron, it would be for the Offroad dirt products that they farm out to other MFG's already. The sled line could go away easily. Maybe keep them up until they run out of parts and extra stock, but I would bet dollars it's for the dirt line.

They would at minimum have to run out the warranties on all existing machines and if Textron wants to bulk up the revenue prior to the sale, all machines sold between now and whenever the deal closes. The knock-on effect is that they have to carry parts through warranty and beyond (as they will still have liabilities). I agree they may want them for the dirt products but they are so intertwined that I don't see either the value for Deere or how they can do this in a way that won't cost them a boatload of money.

 

[biffdotorg]

And it all depends on what they want. They for sure are not buying it for the Dealer Network, as that has been shrinking since Textron bought them out. Other than the rebranding agreement Textron offroad had with Tracker for their SXS's. But I think that agreement may have been diminished as the latest tracker dirt products don't really resemble AC units anymore.

The MFG facilities for Textron off road and Textron Snow divisions may be the only thing of value, as it could replace what they outsource for and add a new line in sleds. We see Polaris making plenty of SXS/UTV's for the big tractor and equipment mfgs worldwide. And Gators have always been known for resembling a golf cart more than a UTV. But they do manufacture their own products in the Wisconsin plant, so that does not seem likely.

Who knows, maybe they want the snow line to get their big customers to come into the shop in the off season. It truly was the reason back in the day for farmers to go to their dealer and drop a few thousand on a sled, while making a commitment on a much larger piece of equipment with plenty more zeros in the figure.

If making the purchase, nobody said they had to honor AC warranties on current sleds. As much as you and I agree that is the right thing to do, they will have no obligation to do so if they discontinue the AC line and start putting out a different shade of green sleds with a deer on the hood. It would be like asking a Yamaha dealer to honor an AC warranty back in the day, knowing they were the same sled under the graphics.

If they chose to sell AC branded sleds, then it would make sense to honor the warranty and save what customer base is there. I would say if they choose to rebrand them, then they may stop all AC production, but still honor the warranty. But I would suspect that any future AC purchases would be labeled Deere.

 

[earthling]

Just responding to the warranty issue. You cannot just sell the business and have the buyer shut down the product line and the warranties and other obligations that go with it. It would be grounds for near instantaneous approval of a class action lawsuit, at least two federal agencies would have a very dim view of the practice, and yamaha has a say in it as well. You can dump the product line because you have little commitment to build future product beyond whatever contractrual obligations you have to existing suppliers but you cannot just dump the rest of the obligations as those are held in contracts. As a buyer, when you purchase a product line you are in effect buying that portion of the business, i.e. you are also purchasing the contracts, obligations, and debts that go with it. I do not see a pragmatic way that they could shut down the product line and not carry the obligations (they have a commtiment to purchase from Yamaha for several years, there will be forecast and specific commitments within that contract, etc. Every consumer purchase is a contract between buyer/seller so in purchasing the product line as a business, they are purchasing those obligations that textron held as the seller at a minimum.

 

[biffdotorg]

Just responding to the warranty issue. You cannot just sell the business and have the buyer shut down the product line and the warranties and other obligations that go with it. It would be grounds for near instantaneous approval of a class action lawsuit, at least two federal agencies would have a very dim view of the practice, and yamaha has a say in it as well. You can dump the product line because you have little commitment to build future product beyond whatever contractrual obligations you have to existing suppliers but you cannot just dump the rest of the obligations as those are held in contracts. As a buyer, when you purchase a product line you are in effect buying that portion of the business, i.e. you are also purchasing the contracts, obligations, and debts that go with it. I do not see a pragmatic way that they could shut down the product line and not carry the obligations (they have a commtiment to purchase from Yamaha for several years, there will be forecast and specific commitments within that contract, etc. Every consumer purchase is a contract between buyer/seller so in purchasing the product line as a business, they are purchasing those obligations that textron held as the seller at a minimum.

Exactly. I'm glad you agree. As stated, it depends on what Deere is looking to buy. If you buy a product line and dealer network, it would be very obvious that those legal obligations follow. But if Deere shuts down AC and buys the MFG facilities, it would be like they just plain went away. And those legal obligations are with a company that no longer exists. This is why you do not see that happen very often.

Just like when Textron purchased AC, they could have shut it down or changed it's name to avoid obligations. Oh yes, that's exactly what they did with the dirt division. They changed it to Textron Offroad in hopes of rolling the dirt division into Textron. Which backfired as they were intertwined to do so.

Textron, being a worldwide company was not sure if the AC name on dirt products would hold up in all markets, but they were proven wrong and within a short amount of time, switched Textron offroad back to Arctic Cat. A few folks in the wildcat forum have a Textron offroad Wildcat.

Better yet, when AC bought out Badboy (I think it was) the makers of the Havoc UTV lines and kept it in tact, other than rolling it into the AC line. They honored the warranties and kept parts rolling as they not only bought the product line, MFG facilities, but also the dealer network and customer base. So it makes 100% sense to not take a dump on those customers and not honor the legal obligation.

Again, it comes down to what Deere is buying. My guess is still the same, it's not the customer base and dealer network, as that has been killed by Textron since their acquisition.