Recreational vehicle maker Coachmen Industries Inc. last week again defeated an acquisition proposal from one of its competitors, setting up a potential shareholder showdown. The board of directors for Elkhart, Ind.-based Coachmen unanimously rejected a purchase offer from Thor Industries Inc. April 26 for what it termed a "nominal" $18 per share.
But Thor, which already owns 466,300 shares in Coachmen — worth a 3 percent stake of the business — is expected to raise the acquisition banner again at Coachmen's annual meeting May 4.
Thor, based in Jackson Center, Ohio, already is soliciting shareholders' proxy votes to oppose Coachmen's slate of director nominees at the annual meeting.
Coachmen is urging its shareholders to fight "Thor's efforts to disrupt Coachmen's business and forthcoming annual meeting."
But Coachmen is dealing with more than Thor.
The company announced April 27 it would miss expected first quarter earnings, with an estimated 25-26 cents per share compared to the 30 cents per share analysts anticipated. It posted first quarter earnings of 43 cents per share in 1999.
Stock prices dropped more than 3 percent within hours of the announcement, trading at $15.1875 per share, down from $16 a week earlier and a 52-week high of $24 per share in the spring of 1999.
Those poor returns should strengthen Thor's hand, said David Tannehill, who follows the RV industry for Memphis-based Morgan Keegan Inc.
"I've got to believe there are a lot of shareholders who want to see their share value increased," he said. "It'd be a lot easier to keep control of the company if you're meeting or beating estimates."
Coachmen Chairwoman Clair Skinner said in a written statement the lower value reflects the cost of implementing new technology. It should double the quarterly 1999 earnings per share number by 2004.
Thor, she continued, was taking advantage of a downturn in the industry to try and "stampede" shareholders.
"This is not the right time to sell the company," she said. "Thor has launched its proposal at a time when not only is Coachmen's stock price depressed, but the entire RV sector is out of favor with investors.
"Thor is trying to stampede shareholders to sell at a depressed price before the value of our recent spending on technology and infrastructure pays off. This is cleverly an attempt to buy Coachmen on the cheap.
"Thor is the wrong partner proposing the wrong transaction at the wrong time and the wrong price."
In its own written response, Thor maintained it offers the best possible option for shareholders, customers, suppliers and employees.
Even Coachmen's promise to double earnings per share by 2004 is too long to wait, Thor officials said.
"While Thor commends Coachmen on its investments in technology and infrastructure ... is it OK for those investments to disrupt business and radically depress Coachmen's earnings for three years?"
Coachmen produces more than 22,000 motor homes and trailers annually under the Coachmen, Georgie Boy, Shasta and Viking brands and produces furniture for boats and RVs under its Lux Co. Inc. unit. All the divisions rely extensively on plastics for exterior and interior parts.
It also owns thermoformer Prodesign and modular home maker All American Homes.
Thor is the second-largest RV producer in the United States, selling about 36,000 vehicles annually, worth 12 percent of the American market. Its brands include Airstream, Dutchmen and Four Winds.
Coachmen has rejected two bids from Thor this year, the $18 offer, with 60 percent in cash and 40 percent worth of stock and a $17 proposal split 50-50 between cash and stocks.
Thor maintains the recreational vehicle industry is getting ready for massive consolidation, and those businesses that are first out of the gate have the most to gain.
Tannehill said he will not be surprised if Thor is successful in buying Coachmen, but noted he expects it will go for a higher price than the existing bids.
"How much higher, I couldn't say," he said. "This is going to play out over the next couple of months."