Polaris Buys Back Company Stock from Fuji Heavy Industries

11/13/2013 @ 10:06 am, by Jensen Beeler7 COMMENTS

Polaris Buys Back Company Stock from Fuji Heavy Industries polaris industries logo 635x423

Polaris Industries has announced that it has bought back 3.96 million shares of the company’s stock from Fuji Heavy Industries, for the tidy sum of $497.5 million — roughly 6% of Polaris’ total market capitalization.

Paying for the stock purchase with roughly $247 million in cash, and $250 in credit, the move is a response to Polaris’ continued push to develop its own engines in-house.

For some background, Fuji Heavy Industries was the sole-engine supplier to Polaris from 1968 until 1995, at which time Polaris began developing its own power plants.

Despite that shift nearly 20 years ago, Fugi has had an integral part of Polaris’ business up until this point, and in 2013 one in four engines in the Polaris model lineup was built by Fuji Heavy Industries.

For 2014 onward though, the use of Fuji engines is expected to drop as Polaris produces more of its own units.

“FHI has been a valued partner and long-term engine supplier since 1968 and a significant, loyal and stable shareholder since we first began trading as a public company in 1987. FHI approached us with the opportunity to repurchase their entire block of Polaris stock at a negotiated discount to the most recent average market price,” said Polaris Chairman and CEO Scott Wine.

“Our decision to repurchase these shares demonstrates not only the confidence we have in the fundamentals of our business, but also our long-term growth prospects and the commitment we have to provide an above-average return to our shareholders. However, this opportunistic share repurchase transaction in no way signals a change in our strategic direction.”

“We continue to believe there are abundant opportunities to further expand and diversify our businesses both organically and through acquisitions and we have ample borrowing capacity and strong cash flow to fund the anticipated growth of Polaris,” concluded Wine.

Polaris stock is up 4% at the time of this writing. Goldman, Sachs & Company acted as financial advisor to Polaris in this transaction.

Source: Polaris

Comment:

  1. KSW says:

    Another not read elsewhere story. Funny how much that the Star Logo of Polaris looks a lot like that other Fuji Heavy Industries vehicle on the road, Subaru.

  2. Jim says:

    …which looks a lot like the Pittsburgh Steelers logo. Do you think the Steelers secretly own FHI?

  3. Mustafa Ibrahim says:

    “Subaru” is Japanese for the star Polaris. I would expect their symbols to be somewhat similar. Fuji Heavy Industries changed their corporate symbol to the one used by their most well-known company, Subaru. By the way, this story is all over the financial pages, and indeed has been posted to most of the popular motorcycle sites. What is interesting to me is that Polaris has become a “stealth” on-road transportation company aside from motorcycle production. They have purchased two electric vehicle manufacturers and also Aixam-Mega. Now, Polaris has increased its defense division by leaps and bounds, not only in purchases by our own DOD but also with governments and defense ministries worldwide. So…my prediction: In five to ten years Polaris will selling highway vehicles that qualify as automobiles. Their side-by-sides could be changed into something road-worthy, but still completely offroad capable. I would buy one! I think Fuji Heavy Industries sees the same future as I do and decided now was the time to divest.

  4. zipidachimp says:

    no need to worry about the financial future of Indian then. ! whew, wot a releef!!!!

  5. johnrdupree says:

    @Mustafa Ibrahim, Subaru does not refer to Polaris but to the Pleiades, a star cluster in the constellation Taurus. That’s why Subaru has more than one star in the logo.

    I know, kind of pojntless information, but there you go.

  6. Westward says:

    Interesting

  7. Mustafa Ibrahim says:

    I stand corrected, John R. Dupree! Not pointless at all. I give journalists crap for not checking their material and here I went and did the exact same thing myself. No dessert for me tonight!