Specialty vehicle maker Polaris Industries (NYSE:PII) is, not for the first time, shelling out to buy a new asset. The acquired entity is privately owned industrial vehicle maker Taylor-Dunn, and the terms of the arrangement were not disclosed.
In the press release announcing the purchase, the company touted the complementary aspects of Taylor-Dunn's business: "While Polaris is best known for our leadership in powersports, adjacent markets are an important aspect of our growth strategy, and industrial vehicles are a natural extension for us."
The new asset will be housed in Polaris' work and transportation division, although it will remain a distinct and separate brand. It will continue to be run from its headquarters in Anaheim, California.
Polaris said that Taylor-Dunn will be neutral to its earnings this year.
Does it matter?
Complementary it may be, but Taylor-Dunn is a pretty small fish. According to a graphic accompanying the press release, its 2015 sales were only around 1% of Polaris'. But then again, something of that size probably wasn't too prohibitively expensive, relative to the buyer's financials. So, why not buy a new set of product lines? Though we can expect some impact on Polaris' stock price as the news is absorbed, it will probably be fairly mild.
Polaris has been an asset collector for years. Recent buys include snowmobile helmet and goggle maker 509 and China-based light utility vehicle manufacturer Hammerhead. By making such purchases, it's putting its money where its mouth is -- such assets are truly "adjacent markets" that fit well into the company's portfolio. So there's plenty of reason to buy them, especially if Polaris is able to do so inexpensively.
Eric Volkman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Polaris Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.