Tourism Holdings enters RV market in US, buys JJ Motorcars’ 450-vehicle Road Bear
Dec. 3 (BusinessDesk) – Tourism Holdings has reached into the U.S. market by agreeing to acquire JJ Motorcars Inc., the recreational vehicle rental company that trades as Road Bear, for $17 million.
The deal, the first big acquisition after several years of selling assets, will add as many as 450 RVs to its fleet. Road Bear is the trading name of JJ Motorcars Inc.
The acquisition of Los Angeles-based Road Bear is “a significant milestone in THL’s change of direction over this period, in which we have transformed from a tourism business with diverse assets in attractions, coaching and rentals, to a leaner operation focused strongly on rentals,” chairman Keith Smith said in a statement.
The purchase price is made of $5 million goodwill and about $12 million for the fleet of RVs. Smith said Tourism Holdings has “a proven business model.” The target company “operates a similar model to THL’s rentals businesses in New Zealand and Australia.”
The purchase will be debt-funded and targeted to complete by Dec. 31, the company said in a statement. Road Bear will contribute US$2.1 million to the company’s EBIT over the first 12 months of ownership and about meet its cost of capital, it said.
Net profit guidance for 2011 for the company’s existing businesses is unchanged at $4.0 million. Non-deductible one time costs for the acquisition would be about $1 million in 2011, it said. Total net profit including the costs of the acquisition in 2011 is forecast at $2.5 million.
The vendors, CEO Daniel Schneider and Horst Hagner, will remain with the company as employees for an agreed period after the completion of the deal, it said.
The shares fell 2.7% to 73 cents in trading today, and have fallen 7.5% this year.