How Does Polaris View the Indian Acquisition?

04/25/2011 @ 1:31 pm, by Jensen Beeler8 COMMENTS

Polaris released some interesting info this past week to its stockholders, perhaps the highlight of which was how the Minnesota-based company views its acquisition of the Indian Motorcycle brand. Disclosing a brief summary of its plans, it’s clear that Polaris aims to go after the heavy-cruiser segment with a two-pronged approach, much in the same manner as we postulated back on Wednesday after news of the acquisition broke.

More important than stroking our own egos, two pieces of interesting insight came from Polaris’s SEC filing 8-K filing. First was a glimpse into what the purchasing price of Indian could be, as a slide to investors shows Indian’s 2010 revenue as being $11 million, which would peg a baseline asking price of about $9 million, though the perceived brand value could raise that price. The second juicy morsel is how Polaris sees Indian fitting in with Victory, showing the potential of tripling Polaris’s motorcycle sales in the future.

In the eyes of Polaris, the heavy-cruiser segment can be broken down into six groups, with Victory currently appealing to the performance enthusiast category. While that may seem like an oxymoron, the proof is in the pudding, and looking at Victory’s sales sheets, this segment group is growing. While Polaris only sees the performance enthusiasts accounting for 21% of the market segment, it hopes that the Indian Motorcycle brand can capture the attention of the “die-hard” riders in the category, a group Polaris pegs as comprising of nearly 40% of the market segment.

With a larger available market comes a larger sales potential, and with all things being equal this could mean a 3x increase in motorcycle sales for Polaris. Using basic industry revenue valuation multiples, this potential sales bonanza likely cost Polaris a paltry $8.8 million or so, which is a cheap price to setup a powerplay to go after Harley-Davidson.

It will be interesting to see what the actual purchase price of Indian will be, which will have to eventually get disclosed to stockholders. From that filing we’ll be able to see what sort of premium was put on the Indian name over the base revenue-derived valuation. It will also be interesting to see if this was a straight cash deal, or if Stellican Limited took some stock as well in the purchase (a strong sign in the seller’s belief that the purchaser will grow and add value to the company).

Source: Polaris; Photo: Ralf Turander / MC Collection – Icons of Motorcycle DesignCreative Commons Attribution 2.0 Generic

  • joe

    Those graphs and charts are a joke, as is Polaris’s desire to make, nothing but cruisers.

  • MikeD

    Im not a Cruiser Guy and would like Polaris to venture into other segments (non-cruiser)…BUT we can’t blame’em for trying to make a profit with w/e sells (cruisers)…after all…that’s the main reason for a “Company” to exist…make money ? Anyone ?

  • MikeD

    P.S: To the author…

    This is not a FACT but rather a lame opinion… when i see both words “performance” and “cruiser” side by side the only images that comes to my head is a VMAX(wich was forced to “fit” as a cruiser by Star planners) or a Diavel (looks like cruiser with 1198 stinch) … Victory’s own Hammer S looks like a chopper rather than anything muscle/performance and more like a fashion accesory… or anything else on their line-up for that matter.

  • 305ed

    What exactly were the parameters of “defining” these rider categories? What is the difference between an “Everyday Rider” and a “Die Hard Rider”. This is a high school level business class presentation at best and I’m surprised that you haven’t thrown the bullshit flag on it. The Indian brand, while storied, is tarnished beyond its’ current owners aspirational expectations.

  • gnmac

    “Buuuuuuuullshit!” to quote Ahnold. WTF, more vintage cruisers? C’mon Polaris, Indian is the first and most iconic motorcycle brand in the US – now freakin’ use that heritage to make a well-rounded company which includes some kind of naked sportsbike at least! For pete’s sake, Indian use to dominate racing in its early days – can’t Polaris capitalize any on that?!!!! We don’t need a THIRD cruiser company in the US, and if they just make VMaxs w/ Indian’s name on them I’m going to cry bloody murder for wasting the opportunity and the investment money! SH*T Polaris, hire Erik Buell to build you a proper 21st Century Indian!!! Is it too much to ask for an American company other than EBR to build a respectable non-cruiser bike for us Americans???????????????????

  • Keith

    heh irony is REAL Indians are more a standard than a cruiser. 8^) Yes some models had styling cues that today we call “cruiser”. Indian inveted that particular look imo. BUT mostly they had bikes you’d call a standard, they also had more power and reliablity than their peers. That is where Polaris needs to go with them…nice strong standards with vtwins that wont quit and make every other vtwin built in the states look like a wimp. But that’s just me, my family owned cheif’s and scouts until the late 60’s.

  • Miles Post

    I would imagine the buyer and purchaser are the same entity.

  • Tom

    So many people keep bringing up Buell’s name. Get real, this is fanboy talk and Polaris is not going to bring him in to do anything with the Indian marque. Polaris will go their own road, whatever it will turn out to be, without someone from a failed bike company that had to be taken over by H-D to stay alive. I’m a fan of Buell and I hope he can start a new comapny and do well, but lets be real about calling in Eric for every damn thing as though he is some great messiah that only he can save such-n-such company from being terrible.